Quote from gangof4:
or...
4. the PRC will be on the other side of the Fed's trade, taking a very nice capital gain on their treasury holdings and repatriating the $ to put to work to further their needed domestic projects to nudge their own consumer spending.
not saying they'd sell out, but it wouldn't exactly be reckless for the PRC to take 1/4 trillion off the table. now would be THE time to do it, as the Fed is now saying they'll be on the other side of the trade to prop up T bonds.
the only question is how much could they sell without attracting too much attention. like i said, if there was ever a time to be able to do it, now is the time. they could always come out after the sells, when they have to disclose, and say that they are committed to their remaining treasury holdings but chose to repatriate some to spur domestic demand, or even to seed a social security-like program (something they need to do to some degree to create some level of safety net so that their people will dare to spend some $).
i'm not too thrilled about another trillion $ sleight of hand where we borrow from the printing machine to buy our own shit. all in an attempt to get the US consumer back spending beyond their means. and, like i've said b4, i have a hard time believing that we need to prop up property prices- the main goal here. sure, prices have come down. but, on the street i live on, that means the average house is now worth $1.4mm instead of 1.7mm (i live in CA and these are NOT mansions- they're 3000-3,500 sq ft homes in a nice area- nothing special). starter homes in not exactly great neighbourhoods are still >600m.
housing may be more affordable than it's been in years in the midwest, but the east and west coast population centers still seem to be WAY overpriced vs median incomes.
