A U.S. government report issued yesterday revealed that China cut its holdings of Treasury bonds and notes by the most ever recently. China’s holdings of long-term treasurys fell by $21.2 billion in June to $839.7 billion. With U.S. interest rates at record lows, the move is not surprising. But don’t expect the Chinese to make a rapid flight from U.S. debt. Instead, I expect a slow and methodical diversification. This slow, yet steady move, will force the Federal Reserve into a corner. Their two options will be to: 1) Monetize the unsold debt by printing money or 2) Raise interest rate targets. I expect the printing presses will be employed first.
For those who still think that this economic crisis is not unique, I recommend you read a short post by the Pragmatic Capitalist entitled, “This is Not the 1930’s.” Here you will learn why unfortunately the labor market is tied to the debt levels.
The billionaire investor, George Soros, is making news this week after it was revealed that he has been dumping his hedge fund’s holdings of U.S. stocks. Now his largest holding, by percentage, is in gold. His other top holdings included convertible bonds and high tech companies like RF Micro Devices (RFMD) and Epicor Software (EPIC). And just in case you needed any more proof, here’s 6 more reasons why the price of gold is guaranteed to go higher in the coming months and years.
And finally, Google’s CEO Eric Schmidt stated this week that the private lives of young people are now so well documented on the internet (Facebook, MySpace, etc.) that many will have to change their names on reaching adulthood. Of course, Mr. Schmidt is assuming that people still feel, uh, what’s that word again? Oh yes, “shame.”
About Jerry Robinson
Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.