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Skatteflyktning 30 Jan 2010, 04:05
QIQrrr 01 Feb 2010, 07:12
QIQrrr 02 Feb 2010, 19:50
QIQrrr 07 Feb 2010, 22:36
QIQrrr 20 Feb 2010, 05:22
QIQrrr 24 Feb 2010, 21:21
QIQrrr 26 Feb 2010, 15:25
China may be hiding US Treasury bonds: experts
MSN News, February 26, 2010
China, a top owner of US government debt, appears to be secretly buying bonds via third locations to hide its importance as a major creditor to Washington, experts told a congressional forum.
They said China-linked entities may be scooping up US bonds in London, Hong Kong or other locations, pointing out that official data almost certainly understates Beijing's US government debt holdings.
Some say the massive holdings by China have implications for US national security, making it harder for Washington to carry out policies in conflict with Beijing.
The latest figures by the Treasury Department this month showed a drop in China's Treasury bond holdings by 34.2 billion dollars or 4.3 percent to 755.4 billion dollars in December, the biggest decline in about a decade.
Simon Johnson, a former IMF chief economist, suggested that China could be behind the big jump in Britain's holdings of US debt to 300 billion dollars in 2009 from 130.9 billion dollars a year earlier.
He said he was baffled by the figure as Britain had run a substantial current account deficit last year.
"A great deal of this increase may be due to China placing offshore dollars in London-based banks -- Chinese, UK, or even US -- which then buy US securities," Johnson told a hearing of the US-China Economic and Security Review Commission, which monitors for Congress the security implications of US-China trade and economic relations.
China may also be purchasing US securities through routes other than Britain, said Johnson, who is now a professor of economics at the Massachusetts Institute of Technology.
"The US Treasury data almost certainly understate Chinese holdings of our government debt because they do not reveal the ultimate country of ownership when instruments are held through an intermediary in another jurisdiction," he said.
Johnson said "a reasonable working assumption" showed that China owns close to one trillion dollars of US Treasury securities -- nearly half of the stock of treasuries in the hands of "foreign official" owners, which was 2.374 trillion dollars at the end of 2009.
"It is all but certain that some purchases made by agents in Britain and Hong Kong were on behalf of SAFE" or the State Administration of Foreign Exchange, the secretive Chinese state agency that buys foreign bonds, said Derek Scissors, an Asia economic policy expert at the Washington-based Heritage Foundation.
He said the more than doubling of Treasury bond purchases by Britain and Hong Kong "makes sense" for China as it had to park its huge chest of foreign exchange reserves.
"These cannot be spent at home and are too large to put anywhere other than the United States. No other country has financial markets capable of absorbing them," Scissors said.
"To hide the unavoidable extent of China's exposure to low-yield American bonds and try to avoid domestic flak, SAFE is routing money through third countries," he said.
China accumulated 453 billion dollars in additional foreign exchange reserves in 2009, bringing the total reserves to a record 2.399 trillion dollars at the end of December, latest Chinese government figures showed.
Many analysts argue that any threat by China to shift a large portion of its reserves out of US government paper is just bluster as such a move would impose huge costs on China itself.
But Eswar Prasad, who once headed the IMF's China division, said it was a "reasonably credible threat as the short-term costs to the Chinese of such an action are not likely to be large."
Any dumping of Treasury bonds could lead to a sharp fall in bond prices and the value of the greenback, incurring massive capital losses on the Asian giant owning the large bond holdings.
"But the US leaves itself vulnerable as China might well view these costs as worth bearing in order to preserve its national sovereignty or if trade and other economic disputes with the US came to a head," said Prasad, a professor of trade policy at Cornell University.
Republican congressman Frank Wolf told the panel that the situation is bad for US security.
"China is among our biggest 'bankers,'" he said.
"The implications of US debt to China are many and wide-ranging, encompassing everything from our national security to our ability to advocate for repressed and persecuted people."
navnditt 28 Feb 2010, 23:24
QIQrrr 04 Mar 2010, 02:03
Bailout 'would spark revolution'
Independent.ie, March 2, 2010
A revolution will erupt if billions of euro more in taxpayers' money is handed over to Anglo Irish Bank, Enda Kenny has warned.
The Fine Gael leader said people can no longer tolerate massive public funding of the nationalised bank as it stands.
Expected record losses at the bank, to be announced later this month, have fuelled speculation it will seek another six billion euro from the Government, on top of the four billion it has already pumped in.
Mr Kenny told Taoiseach Brian Cowen there will be a popular uprising if any such request is given the go-ahead.
"There'll be revolution on the streets if you do that," he insisted.
"Whatever case can be made for Allied Irish Bank (AIB), there can be no case made for giving six billion euro more of taxpayers' money to Anglo Irish Bank.
"This is effectively a dead bank which will not lend any further monies."
Mr Kenny demanded Anglo be split into a "good bank" and "bad bank" - taking control of the toxic borrowings - before it is given any more help.
The Fine Gael leader also demanded AIB be handed preconditions if it requests further recapitalisation, after the lender went into the red for the first time in its history with pre-tax losses of 2.65 billion euro.
Mr Cowen said Anglo has already asked the European Commission for permission to break up into a "good bank" and "bad bank", and insisted the Government remains ready to give more cash to banks in an effort to save them.
QIQrrr 23 Mar 2010, 18:57
QIQrrr 09 Mai 2010, 12:35
QIQrrr 01 Jul 2010, 15:32
QIQrrr 08 Nov 2010, 02:02
Ultima_Thule 06 Jan 2014, 20:55
Ultima_Thule 09 Jan 2014, 19:15
IMF paper warns of 'savings tax' and mass write-offs as West's debt hits 200-year high
Debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, warns IMF paper
Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.
The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its “toolkit” for emerging market blow-ups.
“The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point,” said the paper, by Harvard professors Carmen Reinhart and Kenneth Rogoff.
The paper said policy elites in the West are still clinging to the illusion that rich countries are different from poorer regions and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering (“forbearance”).
The presumption is that advanced economies “do not resort to such gimmicks” such as debt restructuring and repression, which would “give up hard-earned credibility” and throw the economy into a “vicious circle”.
But the paper says this mantra borders on “collective amnesia” of European and US history, and is built on “overly optimistic” assumptions that risk doing far more damage to credibility in the end. It is causing the crisis to drag on, blocking a lasting solution. “This denial has led to policies that in some cases risk exacerbating the final costs,” it said.
While use of debt pooling in the eurozone can reduce the need for restructuring or defaults, it comes at the cost of higher burdens for northern taxpayers. This could drag the EMU core states into a recession and aggravate their own debt and ageing crises. The clear implication of the IMF paper is that Germany and the creditor core would do better to bite the bullet on big write-offs immediately rather than buying time with creeping debt mutualisation.
The paper says the Western debt burden is now so big that rich states will need same tonic of debt haircuts, higher inflation and financial repression - defined as an “opaque tax on savers” - as used in countless IMF rescues for emerging markets.
“The magnitude of the overall debt problem facing advanced economies today is difficult to overstate. The current central government debt in advanced economies is approaching a two-century high-water mark,” they said.
Most advanced states wrote off debt in the 1930s, though in different ways. First World War loans from the US were forgiven when the Hoover Moratorium expired in 1934, giving debt relief worth 24pc of GDP to France, 22pc to Britain and 19pc to Italy.
This occurred as part of a bigger shake-up following the collapse of the war reparations regime on Germany under the Versailles Treaty. The US itself imposed haircuts on its own creditors worth 16pc of GDP in April 1933 when it abandoned the Gold Standard.
Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies. Some of these methods are already in use but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.
The policy is essentially a confiscation of savings, partly achieved by pushing up inflation while rigging the system to stop markets taking evasive action. The UK and the US ran negative real interest rates of -2pc to -4pc for several years after the Second World War. Real rates in Italy and Australia were -5pc.
Both authors of the paper have worked for the IMF, Prof Rogoff as chief economist. They became famous for their best-selling work on sovereign debt crises over the ages, This Time is Different: Eight Centuries of Financial Folly.
They were later embroiled in controversy over a paper suggesting that growth slows sharply once public debt exceeds 90pc of GDP. Critics say it is unclear whether the higher debt is the problem or whether the causality is the other way around, with slow growth causing the debt ratio to rise to faster.
The issue became highly politicised when German finance minister Wolfgang Schauble and EU economics commissioner Olli Rehn began citing the paper to justify eurozone austerity policies, over-stepping its more careful claims.
Critics says extreme austerity without offsetting monetary stimulus is the chief reason why debts have been spiralling upwards even faster in parts of Southern Europe.
The weaker eurozone states are particularly vulnerable to default because they no longer have their own sovereign currencies, putting them in the same position as emerging countries that borrowed in dollars in the 1980s and 1990s. Even so, nations have defaulted through history even when they do borrow in their own currency.
http://www.telegraph.co.uk/finance/financialcrisis/10548104/IMF-paper-warns-of-savings-tax-and-mass-write-offs-as-Wests-debt-hits-200-year-high.html
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