Chart, exchange-rate and holding of US Treasuries : more for more

In august 2009, here what I wrote on the chart with USD-THB exchange rate and thai holdings of US Treasuries.

The BOT fantasy : buying more and more USD (via US debts) in order to maintain the exchange rate USD-THB.

Well, 5 months later, where are we ?

Higher US Treasuries holdings… and higher THB. Well done guys ! 😉

But I agree, you could also see the half full glass here : It means, if the BOT haven’t piled up USD, the THB would have been even stronger.

I remind you the obsession of virtually every asian central banks : weaken their local currencies versus the US Dollar, in order to boost, stimulate their dear exports.

Each countries use different tools, but with the same cheap short term obsession : the Beggar thy neighbour policy. China for instance sets the exchange-rate (It’s much more convenient) because China is an authorian (to use the word “communist” would be an insult to Karl Marx…) state and because they don’t give a rat shit about what other countries and other people think.

For that matter, it’s a shame to see Geithner the slave to bow in front of the Chinese, and to delay the report on… (the alleged as they say !) currency manipulation by China (read here).

Even the Euro Zone is doing the same. The Great Greek Drachma Drama (copyrighted myself)  is… very convenient to say the least (on the short term, eventhough It’s a catastrophy on the medium term) to create a little bit of distrust… and to lower the Euro versus the Dollar. Enough to “boost” the famous german exports…

Boost. Stimulation.Throught debts and cheap (depressed) currencies. It’s the Dildo Economy on Prozac.

The whole freaking planet is running toward the Zero (as far as exchange rates are concerned). Happy and Stimulated. 😉 Have a Viagra, please.

Voila. Thailand is happy with a (small) recovery in exports… in order to please the clowns Korn and Abhisit so they can use the words “GDP growth” and “recovery”, leading to surplus. And those surplus are used to buy… US debts… allowing to keep a relative control on the USD-THB exchange rate. But meanwhile, those surplus and this fake “GDP growth” excite foreign money, oceans of liquidities… Leading to inflows (buy buy buy thai stocks !)… leading to a higher THB… leading to the need to further depress the THB if they want to continue to boost exports… with surplus… etc. etc.

It’s not even a vicious circle anymore. It’s a clown circle. A bozo circle.

Last but not least : the view with % of change year on year. I agree : the BOT seems to slowdown. But it’s too early to say.

(Source Bank Of Thailand, and US Treasury).

11 Responses to “Chart, exchange-rate and holding of US Treasuries : more for more”


  1. 1 Insanity 6 April 2010 at 12:48 am

    Each and every week, the U.S. government sells Treasuries to fund its operations. 4 week bills; 1, 3 & 6 month bills, 2, 3, 5, 7, 10 & 30 year notes.

    Who is buying this trash?
    Individual investors, banks, insurers, pension funds, mutual funds, & foreign central banks. WORRYINGLY direct buyers are hitting a record & of purchases (recently 24% of treasuries). There is no way of knowing who these buyers are. For all we know they could be the Fed itself 🙂 or other US-Government entities buying “off the radar.

    The more aggressive the bidding, the lower the yields Treasury has to pay on the securities it sells. And the lower the yields, the lower the U.S. government’s financing costs.

    For a while, the Treasury Department was able to sell almost anything and everything at rock-bottom yields. It didn’t matter if it was the shortest of short-term bills or the longest of long-term bonds. Investors were willing to pay up. That helped keep the U.S. cost of borrowing low & underwrote the massive deficit with little-to-no financial pain.

    But now that’s changing. To keep fiscal deficits down the U.S. Government has been steadily reducing the maturity of its treasury portfolio because long-term Treasury auctions are getting weaker and weaker.

    Slowly but surely, investors are beginning to appreciate the seriousness of the dangers of all the mega-bailouts … all the Fed money-printing… all the fiscal recklessness being practiced by both Democrats and Republicans alike are starting to spook bond market players.

    The U.S. haven’t seen a “failed” auction yet. That’s when the bid-to-cover ratio drops below 1 — meaning the government can’t even get $1 in bids for every $1 in securities being sold. But that has already happened in the U.K., and probably it’s only a matter of time before it happens in the U.S.

    Saying it one other way; if interest rates on the massive trillions of loans (bonds and any other kinds of free market debt) start to rise, the interest expense will choke and strangle the world economy at every level. We are still in the forest.

  2. 2 ThaiCrisis 6 April 2010 at 12:58 am

    We are still on the beach sand. The forest, and then the jungle, and the pit, are ahead.
    😉

    Enough to see on the listing provided by US Treasury (http://www.treas.gov/tic/mfh.txt) that “caribbean banking centers” (!) have a total of 148 billions… What a joke. The whole game is totally corrupted.

    It’s urgent now : the system has to reset. Reboot. But before, It has to… implode.

  3. 3 Insanity 6 April 2010 at 1:41 am

    @TC

    PLEASE REPLACE LAST POST WITH:

    Thks for the chart on the Major Foreign Holders of Treasury Securities, I was looking for same.

    Some interesting major increased holdings over the year (Jan 2010 – Jan 2009):
    UK (206 / 123.9 billions of dollars),
    Hong Kong (146.6 / 71.7),
    Canada (54.7 / 8.4),
    Poland (22.3 / 3.3)

    Thailand’s month to month holdings, I would say, are steady at around 33 billions of dollars.

  4. 4 Insanity 6 April 2010 at 2:05 am

    The U.S. owes the Caribbean banking centers over $143 billion.

    Who owns these Caribbean banking centers & where do they get their money from?

    The answer can be found here:
    http://www.abovetopsecret.com/forum/thread342930/pg1

  5. 5 antipadshist 6 April 2010 at 4:39 am

    TC

    Each countries use different tools, but with the same cheap short term obsession : the Beggar thy neighbour policy.

    it seems like history repeats itself as in 1997-98.
    yet same thing happening again :

    The IMF Flag reads: ECONOMIC SLAVERY

    looking at the history of the IMF, there is not a single example of its having a limited involvement in any country in which it was called into operation. It (IMF) went in and imposed austerity measures which benefited the Wall Street banks. It will enslave you economically…

    the question is do you want to live as human beings or as slaves? If you want to live freely, you will have to fight for your freedom and there will be consequences. Or… you can surrender your children and your grandchildren to the IMF as slaves. Those are the choices. You either take bitter medicine now or you prostitute your children to the IMF.
    …”

    here is interesting detailed story of how it has already happened once in ’98 with some quote :

    The IMF Crisis
    WSJ 15 April 1998

    “Asia’s crisis has been primarily a currency crisisDevaluations made it much harder to service foreign, dollar-denominated debt. That, in turn, caused lenders to run for the exits, fearing the last one out would be stuck with any defaults…

    The brunt falls not on rich lenders, or on the officials at the IMF and treasury departments, but on ordinary folks in places like South Korea and Indonesia–who have seen their jobs, savings, and hopes wiped out in one swift swat… ”

    also : IMF’s Role in the Asian Financial Crisis

    BTW TC, do you know by chance – where from Abhisit & Korn borrowed their “stimulus” ? that might explain a lot of things.
    this
    the best I could find is :

    [Korn] said the cabinet had approved plans to authorize the finance ministry to borrow 800 billion baht from local money markets to fund the projects… ”

    what means “local” – Thai or SEA regional ?
    there are no more other details, looks like a mystery.

    here is a bit more:
    Thailand’s government last month won parliamentary approval to borrow 800 billion baht locally to fund its three-year investment plans… ”

    I guess that means inside the country.

    resent :
    March 31, 2010
    Korn said details of the Bt400 billion borrowing bill would be clearer after the Songkran festival… ”

    no wonder he is so pissed of with ongoing UDD rally that is urging to use force to disperse them – just Imagine if UDD succeeds in their demand to dissolve the Parliament ! 😀
    that would be a total disaster for him and all those mysterious “local” lenders who would provide the “stimulus” ! no wonder 3 associations are constantly being mentioned (bankers, traders, industrialists) – they are all tied up together in this “stimulus” affair, some would lend, other receive. of course they simply can’t allow it to be disrupted or even postponed.

    I think it is strange that these details are still being kept undisclosed till now.

  6. 6 ThaiCrisis 6 April 2010 at 5:12 am

    We should be very cautious… All the insanities about the penultimate “stimulus” plans (it started with Samak) could be nothing but… insanities.
    Fantasies of bored (and greedy) politicians.

    Where are the hundred of billions THB ? Where are the “hundreds” of KM of new train lines (the famous “mega projects”) promised by… Thaksin (yeah, he started) ? And after him the silly generals ? And after them the inane Samak ? And after him… the stupid duo Abhisit/Korn ?

    Answer : nowhere.

    No money = no honey.

    They need several YEARS to finish the BTS extension on Thaksin bridge… They need several YEARS to build a mere 28 KM train line to the airport etc.

    Fantasies.

    There isn’t a conspiracy. Just plain incompetence.

    First they were supposed to borrow outside Thailand. When they understood that nobody would buy their fantasies, they spoke about “local fundings”. Fair enough.

    Show me the cash. Korn says “after Songkran”.

    We’ll see.

  7. 7 David BKK 7 April 2010 at 2:39 pm

    When do you think the exchange rate will become normal as: 1USD = from 35 baht to 38 bath?
    Cheers
    David

  8. 8 ThaiCrisis 7 April 2010 at 2:45 pm

    Do you seriously believe that there is still an once of “normality” in the markets ?

    I don’t believe it.

    USD-THB could be 25, 35, 45, 55 ? We can just stick to the past. That’s all we got at that point. But tomorrow ? No certainty…

  9. 9 antipadshist 9 April 2010 at 5:01 am

    TC

    No money = no honey…
    Show me the cash. Korn says “after Songkran”.
    We’ll see.

    apparently, Korn feels himself sort of Fed’s Bernanke, showering money from helicopter. 🙂 and actually Nation reports that there are much more than 400bln at stake :

    Govt extends disbursement deadline

    The government had threatened to axe all projects whose budget disbursement details failed to reach the Budget Bureau by today’s deadline. However, a grace period of one to two months was granted to the Public Health, Education and Natural Resources and Environment ministries…

    While Korn said details of the Bt400 billion borrowing bill would be clearer after the Songkran festival, the Budget Bureau source noted that the 2011 budget bill, which involves Bt2 trillion in expenditures, is nearly complete.

    this explains why too many people, with Korn at the helm, furiously opposing red-shirts – particularly ajarns (yesterday it was reported that 300 academics signed letter to Abhisit to urgently disperse UDD rallies; earlier these academics dressed in pink to hold their own anti-reds rally)

  10. 10 antipadshist 9 April 2010 at 3:42 pm

    interesting bit :

    China Seems Set to Loosen Hold on Its Currency

    it will allow its currency to strengthen slightly and vary more from day to day…
    by spending several hundred billion dollars each year to hold down the value of the renminbi, China has made its exports extremely competitive in foreign markets and taken away sales from manufacturers in the United States and other countries.
    by spending several hundred billion dollars each year to hold down the value of the renminbi, China has made its exports extremely competitive in foreign markets and taken away sales from manufacturers in the United States and other countries…
    The move is being made for domestic policy reasons in China, primarily as an inflation-fighting tool…

    Holding down the value of the renminbi through huge currency market intervention has become an enormous expense for China. The central bank spent 9.2 percent of the country’s economic output last year on the purchase of foreign reserves, mainly Treasuries that are now paying low interest…

    A stronger currency helps hold down prices by making imports cheaper. It also gives China’s central bank more room to raise interest rates and brake economic growth while lessening the risk of drawing more speculative investments into the country…

  11. 11 antipadshist 14 April 2010 at 8:36 pm

    “beggar thy neighbor moves into high gear: Japan Mulls Monetization of Debt & 30% Devaluation of Yen

    so it begins (or continues, but intensifies)


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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