Chinese Leave and Economy Collapses

(CNSNews.com) - China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation's debt.

Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China's overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China's ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.

Prior to the fall of 2008, according to Treasury Department data, Chinese ownership of short-term Treasury bills was modest, standing at only $19.8 billion in August of that year. But when President George W. Bush signed legislation to authorize a $700-billion bailout of the U.S. financial industry in October 2008 and President Barack Obama signed a $787-billion economic stimulus law in February 2009, Chinese ownership of short-term U.S. Treasury bills skyrocketed.

By December 2008, China owned $165.2 billion in U.S. Treasury bills, according to the Treasury Department. By March 2009, Chinese Treasury bill holdings were at $191.1 billion. By May 2009, Chinese holdings of Treasury bills were peaking at $210.4 billion.

However, China's overall appetite for U.S. debt increased over a longer span than did its appetite for short-term U.S. Treasury bills.

In August 2008, before the bank bailout and the stimulus law, overall Chinese holdings of U.S. debt stood at $573.7 billion. That number continued to escalate past May 2009-- when China started to reduce its holdings in short-term Treasury bills--and ultimately peaked at $1.1753 trillion last October.

As of March 2011, overall Chinese holdings of U.S. debt had decreased to 1.1449 trillion.

Most of the U.S. national debt is made up of publicly marketable securities sold by the Treasury Department and I.O.U.s called "intragovernmental" bonds that the Treasury has given to so-called government trust funds - such as the Social Security trust funds - when it has spent the trust funds' money on other government expenses.

The publicly marketable segment of the national debt includes Treasury bills, which (as defined by the Treasury) mature in terms of one-year or less; Treasury notes, which mature in terms of 2 to 10 years; Treasury Inflation-Protected Securities (TIPS), which mature in terms of 5, 10 and 30 years; and Treasury bonds, which mature in terms of 30 years.

At the end of August 2008, before the financial bailout and the stimulus, the publicly marketable segment of the U.S. national debt was 4.88 trillion. Of that, $2.56 trillion was in the intermediate-term Treasury notes, $1.22 trillion was in short-term Treasury bills, $582.8 billion was in long-term Treasury bonds, and $521.3 billion was in TIPS.

At the end of March 2011, by which time the Chinese had dropped their Treasury bill holdings 97 percent from their peak, the publicly marketable segment of the U.S. national debt had almost doubled from August 2008, hitting $9.11 trillion. Of that $9.11 trillion, $5.8 trillion was in intermediate-term Treasury notes, $1.7 trillion was in short-term Treasury bills; $931.5 billion was in long-term Treasury bonds, and $640.7 billion was in TIPS.

Before the end of March 2012, the Treasury must redeem all of the $1.7 trillion in Treasury bills that were extant as of March 2011 and find new or old buyers who will continue to invest in U.S. debt. But, for now, the Chinese at least do not appear to be bullish customers of short-term U.S. debt.

Treasury bills carry lower interest rates than longer-term Treasury notes and bonds, but the longer term notes and bonds are exposed to a greater risk of losing their value to inflation. To the degree that the $1.7 trillion in short-term U.S. Treasury bills extant as of March must be converted into longer-term U.S. Treasury securities, the U.S. government will be forced to pay a higher annual interest rate on the national debt.

As of the close of business on Thursday, the total U.S. debt was $14.34 trillion, according to the treasury statement. Of that, approximately $9.74 trillion was debt held by the public and approximately $4.61 trillion was "intragovernmental" debt.

Fake Economy Collapses
Garrett Crawford - 08/30/2010
(David's notes in red)

There is this mall by my house called Eastgate Mall. (Where merchandise that comes into the country from the East is sold.) On the land of this mall there used to be a cinema but about eight years ago they demolished it and now it's just a parking lot. In this dream, I walked out of the mall and saw a Kmart where the cinema used to set but in the natural there is nothing there. (Cinemas are where they put on a show for the public. These shows are not real but are for playacting. The economic market, represented by Kmart, is founded on this playacting but, in fact, there is no real, sustainable market existing. It is all false confidence based on lies so people will invest in it.)

I walked over to it and when I walked inside a young Kmart worker handed me a cart and told me that the store was closing and all the inventory was to be given away, at no cost. I was pretty excited. This was not announced to the public; it was kept totally secret. Only the people who came in the store that day would be told and that was it. (I wondered why they would not just sell the merchandise at a sale price and advertise it, and make a lot of money.) It was as if Kmart did not want the public to know they were closing, but they had to dump the inventory and the fastest way to do that was to give it away. (I believe whatever "may" happen will be basically unnoticed by the general public so there might not be some "big" sign that something devastating has happened, but a few will know and I hope we are counted among them.) (Rather than cause a run on the banks by drawing attention to the fact that this has been a confidence game, they give the merchandise away because the dollar is worthless to them. Sounds like the dollar will be devalued. Behind the scenes the public did not know they were [and are] printing it like toilet paper.)

I started going through the store with my cart. I was going to get so much stuff -- or so I thought! As I went through the aisles, I realized most of the merchandise was cheap, Chinese-made goods (from the East) that were fragile and flimsy. (And not worth the shipping cost to send them back to China. Their goods are worthless in the U.S. because they do not want the dollar in exchange.) Everything was basically junk. Every time I picked something out, I just put it back; I never actually took anything. I did remember that my niece's birthday was near or had just passed and I went to the card section to get her a birthday card. (I called my niece after the dream to ask when her birthday was. It is November 15th.)

I picked a card out but I put it back, too. During this time the word spread around town via cell phones that Kmart was giving everything away and the store began to get heavy traffic from shoppers.

I know this dream is very vague but I feel strongly this means something! What? I don't know. I think Kmart represents the economy or something. I also remember Kmart almost went totally bankrupt during the crisis of 2008. (Stores that made it through the last crisis will not make it this time.) There is no Kmart where I saw one in the dream, so I know it represents something bigger than a mere Kmart. (The nonexistent U.S. economy.) I feel strongly that something is going to happen around the beginning to middle of November when my niece's birthday is.

It's like the government or forces that control the markets KNOW something is coming and they are quietly dumping stock, merchandise or whatever. They are not announcing this to the public and only a few know. I know we can make sense of all this with God's grace.

Doris Hamilton: I asked the Lord to confirm this with something that I would know was from Him. Then, I quickly scanned the news and this is the news headline that was brought to my attention: Burger King May Be Taken Private. But I read/saw IN Private. Immediately the Lord reminded me of the dream that I had in 2008. A dream that was titled The King Is Dead. (Below it is Deborah Horton's dream of bank runs.)

I do have a witness that this is indeed coming quickly. I also asked Kaile what the Lord brought to her attention and she was reminded of her dream of a huge food warehouse and in particular the man's voice that she was led to believe was the Lord speaking. Economist N. Roubini made a dire prediction that the US economy would not even be recognizable by the end of this year. Here we are and it appears that will be a pretty accurate prediction.

David: We have had dreams of a bank robbery that is going on. Is it on a human or spiritual level? I would say both. The powers that be are plundering the economy through their shell game to fund their special projects and leaving us with worthless paper. We have heard witnesses, politicians, contractors and even secret videos of extremely expensive underground cities being built by the elite in the richer countries in order for them to escape the chaos and destruction they know is coming. {Rev.6:15} And the kings of the earth, and the princes, and the chief captains, and the rich, and the strong, and every bondman and freeman, hid themselves in the caves and in the rocks of the mountains. They reason that the chaos and fall of the economy is necessary to convince the people that a new world order is needed to weather the storm. Stimulus money is taken and those who ask where it went are frankly told they will not reveal this and it is forgotten. Couriers are found in foreign countries with billions in treasury bills and the people ask where this is going and we hear no more about it. Vice presidents admit that they have lost trillions of dollars and don't know where it went. Greed is bringing the world financial systems down so that Christians will look to God. Invest in the kingdom people, saints, and not in a bag with holes in it. {Mat.6:19} Lay not up for yourselves treasures upon the earth, where moth and rust consume, and where thieves break through and steal: {6:20} but lay up for yourselves treasures in heaven, where neither moth nor rust doth consume, and where thieves do not break through nor steal. {Luk.12:33} Sell that which ye have, and give alms; make for yourselves purses which wax not old, a treasure in the heavens that faileth not, where no thief draweth near, neither moth destroyeth. {18:22} And when Jesus heard it, he said unto him, One thing thou lackest yet: sell all that thou hast, and distribute unto the poor, and thou shalt have treasure in heaven: and come, follow me.

Chinese companies pull out of US stock markets
By Joe Mcdonald, AP Business Writer | Associated Press - Tue, Aug 14, 2012 9:04 AM EDT [ link ]

Chinese firms leave US stock markets amid complaints about price, accounting scrutiny

BEIJING (AP) -- Just a few years after Chinese companies lined up to sell shares on Wall Street, a growing number are reversing course and pulling out of U.S. exchanges.

This week, Focus Media Holding Ltd., announced its chairman and private equity firms want to buy back its U.S.-traded shares and take the Shanghai-based advertising company private. The deal would value Focus Media at $3.5 billion, according to financial information firm Dealogic.

Smaller companies also are withdrawing from U.S. exchanges. In a sign of official encouragement, a Chinese business magazine said a state bank has provided $1 billion in loans to help companies with listings abroad move them to domestic exchanges.

The withdrawals follow accusations of improper accounting by some companies and a deadlock between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors.

Some Chinese companies say they are pulling out of U.S. markets because a low share price fails to reflect the strength of their business. Withdrawing also eliminates the cost of complying with American financial reporting rules.

Focus Media "has been seriously undervalued on U.S. stock markets" and being taken private will help to promote its "long-term strategic development", said a company spokeswoman, Lu Jing.

The company, formed in 2003, operates electronic advertising displays in elevators, grocery stores and other locations.

"We haven't considered whether to list the company on Chinese markets but that possibility has not been excluded", Lu said.

U.S.-traded Chinese companies faced scrutiny after auditors for several quit and others were accused of accounting irregularities. Concerns about company finances have caused share prices to tumble, costing investors several billion dollars.

"Probably all these companies have some questionable accounting, so they may prefer to move out of the U.S., not to come under too much scrutiny", said Marc Faber, managing director of Hong Kong fund management company Marc Faber Ltd.

A financial firm, Muddy Waters Research, accused Focus Media last year of overstating the number of its display panels and questioned acquisitions reported by the company. Focus Media denied the allegations and said independent auditors confirmed the size of its network.

This week, Muddy Waters founder Carson Block said in a statement: "The markets are far better off if a few deep pocketed investors own Focus Media instead of mutual funds and other public shareholders".

The group proposing to take the company private includes its chairman, Jason Nanchun Jiang, and private equity firms Carlyle Group, CITIC Capital Partners, CDH Investments and China Everbright Ltd.

The status of Chinese companies in the United States could be complicated by a dispute between U.S. and Chinese regulators over whether American inspectors will be allowed to examine the work of their China-based audit firms.

Washington wants auditors to hand over documentation on companies that are under investigation but Chinese authorities have barred the release of some information. If a settlement is not reached, the SEC could reject audits by China-based firms, forcing companies to find new auditors.

In May, Beijing took steps to tighten control of local affiliates of major accounting firms by issuing a requirement for Chinese citizens to head those offices.

Dozens of Chinese companies issued shares on Wall Street over the past decade, raising billions of dollars from investors who wanted a stake in the country's booming economy.

Many were private companies that could not raise money on Chinese exchanges that were created to finance state industry or wanted the higher public profile.

Chinese regulators encouraged the move as a way for entrepreneurs to raise money and speed the development of China's economy. But in recent years Beijing has encouraged private companies to issue shares in China to help develop its markets and give Chinese households better investment options.

Regulators have made it easier for private companies to join China's two exchanges in Shanghai and the southern city of Shenzhen, though most listings still are for state enterprises. The Shenzhen exchange created a second board for small companies, imitating the U.S.-based Nasdaq market.

Major state companies such as oil giant PetroChina Ltd. and China Mobile Ltd., the world's biggest phone company by subscribers, also have issued shares abroad. None has indicated it plans to withdraw from foreign stock exchanges.

The economics also are shifting in China's favor.

U.S.-traded companies saw share prices plunge following the 2008 global crisis, while economic growth at home, even after a recent decline, is still forecast at about 8 percent this year. Rising Chinese incomes are creating a bigger pool of money for investment.

"Generally speaking, a company's shares are sold at a higher premium in initial public offerings on Chinese stock markets than on U.S. markets", said Mao Sheng, a market strategist for Huaxi Securities in the western city of Chengdu.

Also, he said, "If the company's business is mainly in China, it will be good for its brand promotion".

Another U.S.-traded company, Fushi Copperweld Inc., announced plans in June by its chairman, Li Fu, and a Hong Kong firm, Abax Global Capital, to take the maker of metallic conductors private.

Muddy Waters cited Fushi Copperweld in April as one of several companies it said dealt with an investment bank that helped enterprises seeking U.S. stock market listings to conceal problems and misrepresent financial information.

Fushi Copperweld denied Muddy Waters' "vague and nonspecific" claims.

The company said its privatization will be financed with loans from the China Development Bank.

Created to support construction of highways and other public works in China, CDB plays a growing role in its corporate expansion abroad. The bank provides credit to buyers of Chinese telecoms gear and other big-ticket goods and has financed building projects in Africa, Latin America and Asia.

CDB has lent $1 billion "to help Chinese public companies leave the U.S. stock market to return to domestic markets", the business magazine Caixin said last month.

Employees who answered the phone at Fushi Copperweld said no one was available to comment.

Also in June, China TransInfo Technology Corp., a provider of traffic management technology, announced privatization plans to be financed by CDB's Hong Kong branch. A company spokeswoman said she could not comment because the plan is not finalized.

In October, Harbin Pacific Electric Co. withdrew from Nasdaq in a share buyback financed by $400 million in loans from the CDB.

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