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Thursday, January 29, 2009

Worrisome China/US Finances

Chinese Leader Raps U.S. for Global Slump - Wall Street Journal.

Very worrisome. Basically the US finances have lost face and trust with the Chinese Government. The Chinese government is feeling betrayed on their investments.

Key Points from the article:
  • Beijing is re-examining its U.S. investments, say people familiar with the government's thinking.
  • Chinese government investments got burned with Morgan Stanley, the collapsed Reserve Primary Fund and mortgage giants Fannie Mae and Freddie Mac.
  • Chinese central bank last year stopped lending its Treasury holdings for fear the borrowers will go bankrupt.
  • China the largest foreign investor in bonds from Fannie Mae and Freddie Mac -- has been sharply trimming its holdings of that debt.
  • Shares fell 60% in the $5.6 billion stake in Morgan Stanley purchased by China's sovereign wealth fund, China Investment Corp. (CIC, 13 months ago.
  • CIC has sustained large paper losses on the $3 billion it invested in Blackstone Group LP in June 2007, as well as the Morgan Stanley stake.
  • CIC's nearly $5.4 billion investment in the Reserve Primary Fund, the money-market fund that "broke the buck" in September as a result of the Lehman collapse, has asked the US to redeem it. That has not been done yet, causing worry about US credibilty.
  • The Chinese government has received briefings from the former secretary of treasury on the financial crisis. This shows the depth of communication - At one briefing for Chinese officials to explain the change, said people present, they questioned and debated the meaning of nearly every line of the new Treasury plan.

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Anonymous Anonymous said...

Obama will definitely create more problems than bush


January 31, 2009 at 3:37 AM  

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