China losses NOPE

Rumor PBoC Governor Zhou "John Meriwether" Xiaochuan Has Defected From China After Suffering Half A Trillion In UST-Related Losses

I'm missing something here.

Where are the losses in US bonds coming form?

A drop in interest rates increases principal value,

of currently owned bonds, as the older bonds

pay a higher interest rate.

One of the attractions of US Gov bonds is

they always come back to par at maturity.

An increase in interest rates will drop principal

value of of bonds if sold before maturity.

( When interest rates go up, older bonds decline

in prinicipal as they are worth slightly less because

new bonds would pay higher interest rates and

by contrast as interest rates decline older bonds

paying a higher interest rate increase in principal.)

If China has losses then they were doing something 

strange?

Anybody explain how China could have significant

losses in US bonds in current market?

Thanks

Gerald

Series 3 and 7

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UPDATE: Thomas PM Barnett
Losses not from US Bonds, but China's
Gov sections acting like Wall St Bankers.
http://www.thomaspmbarnett.com/globlogization/2010/9/1/debt-hiding-china-style.html

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