** 17-Aug-2019 China selling off Treasuries
Higgenbotham wrote:
> Why would somebody think China would do that? Well, a few days ago
> China reset their currency peg over 7, the US labeled them a
> currency manipulator, then the next day they reset it back under 7
> (something like that). And everything went back to looking pretty
> good. Most breathed a sigh of relief and said all is well.
They reset it back below 7, but then the next fixings were above 7.
Higgenbotham wrote:
> I looked at it differently. In my opinion, what China did was see
> how much they needed to move the needle to get how much bang in
> terms of a stock market crash. So let's say they moved the peg
> 0.05 and they got the S&P to go down 5% the next day. Now they may
> figure if they move the peg 0.20, and threaten to sell $500
> billion worth of long term US treasuries, and sell so may billion
> worth of stock index futures in the dark of the night, maybe they
> could get a crash out of it.
Maybe this is famous last words, but I can't see any possibility that
the CCP would do anything like this. This is far from their M.O.
One issue is that the Chinese have no ability to control stock prices
in that way, and they know it. Second, even if they could induce a
crash in NY, it would trigger crashes in Hong Kong, Shenzhen, and
Shanghai, and then in other Asian stock markets. That would be a
disaster for Asia, and the Chinese would be blamed for it, for no gain
to themselves.
The CCP is an elite corrupt club of criminal thugs. They look for
ways to use criminal activities to get what they want at no cost to
themselves.
I'm trying to think of an analogy that might explain this. How about
this: Suppose that I were a CCP thug and I wanted your car. I might
consider buying it from you, but since the CCP considers you to be a
barbarian, I wouldn't want to demean myself. I might consider
stealing it from you, and that would be the most approriate thing,
because I'm in the Master Race and you're a barbarian, so you don't
even deserve a car. You can walk. That's how the CCP thinks.
The concept of selling off US Treasuries to create a Wall Stree crash
would be doing the following: I get in my car, and smash it into your
car, destroying both of them. As a CCP thug I would never do that,
for the simple reason that I don't get your car that way, and in fact
destroy my own car. The CCP criminal thug mind would not think of
doing that.
Although the Chinese are furious about Trump's trade sanctions,
they're not the CCP's biggest problem. China's economy may be going
into a recession. A recession is bad new for any country, but it
could be disastrous for the CCP, since it would mean Xi Jinping had
lost his Mandate from Heaven, which would result in an anti-CCP
rebellion.
A far bigger problem than the trade sanctions is the unrest in Hong
Kong. The unrest is occurring along the same north vs south fault
line that led to the last two generational crisis civil wars -- Mao's
communist rebellion, and the Taiping rebellion. The CCP thugs are
aware of that, and would not do something that would be likely to
stimulate an anti-CCP rebellion. Remember: This is a bunch of thugs
so paranoid, they're afraid of Winnie the Pooh.