Internet Anthropologist Think Tank: China losses NOPE

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    Monday, August 30, 2010

    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 

    Anybody explain how China could have significant
    losses in US bonds in current market?


    Series 3 and 7

    UPDATE: Thomas PM Barnett
    Losses not from US Bonds, but China's
    Gov sections acting like Wall St Bankers.



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