Tuesday, December 17, 2013

Foreign Treasury Holdings and Pettis

In the last reported month Foreign Treasury holdings have gone from 5652.9 to 5653.5 or up only 0.6 billion. Over the last 8 reported months it has gone from 5691.1 to 5653.5 or down 37.6 billion.

If you look at the last 5 reported months China has gone from 1297.3 to 1304.5 but last month it was 1293.8.   So last month you could say they were slightly down for 4 months and this is slightly up for 5 months.   But China has since said it is No Longer in China’s Interest to Increase Reserves.

Michael Pettis says that  If foreigners buy fewer USD assets, the US trade deficit must decline.  From this Pettis says that "China Won’t Sell Our Bonds Anytime Soon".   Since they have stopped buying bonds, and the US still has a $40 billion per month trade deficit, I think Pettis overlooked something.   Seems to me that foreigners can buy up other assets besides bonds.   They could be buying land and stocks for example.

I would certainly rather buy US land or US companies or gold than US bonds, given the rate of money creation.    It would seem I am not the only one.   This is a list of famous US brands now owned by foreigners
  1. Budweiser, now owned by Anheuser-Busch InBev N.V., which is based in Leuven, Belgium
  2. Alka-Seltzer, now owned by German company Bayer Schering Pharma AG
  3. Ben & Jerrys, now owned by British-Dutch Unilever
  4. AMC theaters, now owned by the Chinese
  5. 7-Eleven, now owned by the Japanese company, Seven & I Holdings
  6. Woman’s Day Magazine, now owned by the French company, Hachette Filipacchi M├ędias, S.A
  7. Purina, now owned by the Swiss company, Nestle
  8. Gerber, now owned by the Swiss pharmaceutical giant, Novartis
  9. Firestone, now owned by the Japanese Bridgestone Corporation
  10. Citgo, now owned by the government of Venezuela
  11. French’s Mustard, now owned by Reckitt Benckiser, a British conglomerate
  12. Frigidaire, now owned by Sweden’s AB Electrolux
  13. The Plaza Hotel in New York City, now owned by Israeli billionaire Yitzhak Tshuva’s El-Ad Group
  14. Trader Joes, now owned by German billionaires Karl and Theo Albrecht
  15. Dial soap, now owned by Henkel KGaA, based in Dusseldorf, Germany
  16. Sunglass Hut, now owned by Italian eyewear seller Luxottica Group

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