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hamilchr
Member since May 2014
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The Belgian Connection

- Peter Schiff - Euro Pacific Capital

I'd suggest Peter take a wider view to this topic...

1- Why did Russia begin buying Treasury's in '07 where they had never shown interest before???

2- Why did Russian Treasury ownership peak in July '10 @ $176 B and why has it now declined to $100 B???

3- Why, exactly as Russia began it's decline, did Belgium (holding "only" $17 B in Jun '10...the month before Russia's peak), begin it's massive accumulation starting in July '10??? Belgium had held between $10 - $15 B since the turn of the century...why the big change???

Here's the data...

Jan '03 - Russia held less than $5 B / Belgium held $16 B

Jan '07 - Russia held $8 B in Treasury's...has not ever held significant Treasury positions

Jan '08 - Russia $35 B / Belgium $13 B

Jan '10 = $124 B (Russia peaks in Jul '10 @ $176 B) / Belgium held $17 B as of Jun '10

Jan '11 - $139 B Russia / Belgium $32 B

Jan '12 - $146 B / Belgium $132 B

Jan '13 - $164 B / Belgium $186 B

Jan '14 - $132 B / Belgium $310 B

Mar '14 - $100 B / Belgium $381 B

And why did "foreign" finance centers (not just Belgium) feast on Treasury's since '07??? What changed??? Why the increase from $376 B to over $1.5 T??? Particularly since the US trade deficit peaked in '06 (-$752 B/yr) and has fallen nearly in half since (-$475 B/yr '13)...half as many dollars to be recycled into Treasurys???

GLOBAL BANKING CENTERS

Jan '00 - '07 - Feb '14

"Carribean banking centers"

$ 35 B ---> $68 B ---> $312 B

UK $50 B ---> $100 B ---> $176 B

Switzerland $18 B> $34 B ---> $176 B

HK $39 B ---> $52 B ---> $156 B

Singapore $30 B-> $30 B ---> $91 B

Ireland $5 B ---> $19 B ---> $113 B

Belgium $28 B --> $13 B ---> $381 B

Luxemburg <$5 B-> $60 B --> $145 B

TOTAL $210 B $376 B $1,550 (750% increase)

And why did "foreigners" suddenly want to buy so much of something no one in the US (other than the Fed) wanted to buy???

Jan '00 - '07 - Feb '14

$1 T ---> $1.6 T ---> $5.9 T (cumulative "foreign" held US Treasury debt)

25% ---> 40% ---> 55% (% of notes / bonds held by "foreigners")

1% ---> 1% ---> 25% (% Fed held notes / bonds...Fed primarily held Bills until '08)

74% ---> 59% ---> 20% (% domestically held notes / bonds)

And of course this is why our debt payments have collapsed...while our debt has more than tripled since '00

6.6% ---> 5% ---> 2.4% (net interest rate on debt)

$300B -> $270B ---> $223B (net interest paid on national debt)

$9.2 T --> $13.7 T --> $16.2 T (GDP = 75% increase);

$5.7 T --> $9 T --> $17.5 T (National debt = 305% increase )

I would suggest Mr. Schiff see this US and global bond buying not as temporary but a clear trend...regardless the originations of the "money"...

10yr debt below 1%
Japan 0.61%
Switzerland 0.84%

10yr debt below 2%
Sweden, Netherlands, France, Germany, Austria, Belgium, Denmark, Finland,

10yr debt below 3%
Ireland, Spain, UK, Canada, US, Italy

10yr debt below 4%
Australia 3.86%, Portugal 3.81%

Commented 3828 days ago

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Beginning of the headline :One of the biggest questions at the end of 2013 was how the Treasury market would react to the reduction of bond buying that would result from the Federal Reserve's tapering campaign. If the Fed were to hold course to its stated intentions, its $45 billion monthly purchases of Treasury bonds would be completely wound down by the fourth quarter of 2014. Given that those purchases represented a very large portion of Treasury bond issuance at that time, it was widely assumed by many, me in particul... Read More

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