WASHINGTON – Japan overtakes China as the largest holder of US treasuries in October, as China’s holding dropped to the lowest level since June 2010, data from the US Treasury Department showed on Thursday.

China cut its treasuries holding by $41.3 billion in October, with the total holding down to $1.1157 trillion. It has cut the holding for five consecutive months.

Japan also shed its treasuries holding by a smaller amount of $4.5 billion to $1.1319 trillion.

China Daily 12/16/16

Here’s how Trump grows his businesses. He takes hostages. It won’t work against China.  They’ve been moving on it for months now.  Trump’s already walked into their trap.

He grabs big loans far in excess of collateral. He does this because there’s plenty of rich suckers. He pockets the excess and shows the mark that there’s only 50% of the loan that’s collateralized. “We walk, I declare bankruptcy, you lose any hope of collecting even 30%. You’re stuck in the game with me, chump. I make the rules.”

Now the sucker has to sweat to build equity in the enterprise, or he’s dead meat. The mark’s probably financially underwater already, ‘cos he’s a Big Shot doing business with The Don. He tells his friends, buys a new limo. Chump. 

All the while, Don’s sluicing his “overhead” into his own pocket. If the mark can make the enterprise profitable, back up to a break-even or better, the lender can get his money back, maybe even a 15% profit for a hell of a lot of work. And Don walks off with 80% of the loan in his pocket. But he put up 0% money with 0% risk, and he’s been in the black since the deal was signed.

That’s only if the deal succeeds. Look at the numbers – if it doubles in equity value, then the original lender makes 15% back on sweat and risk – and Trump makes a little less, no risk, no sweat.  But if the deal tanks, Don walks with 50% of the loan already in his pocket, and tells the mark, “we’re bankrupt!”  The mark gets maybe ten cents back on his dollar, after years in bankruptcy court. Of course, Don lets the mark keep all ten cents.

Don thinks he’s gonna roll the ChiComs in the patented Trump scam. But he’s in the wrong league.

The ChiComs used to pour $10 billion a week into the US government shortfall. A week. All they have to do is not show up at the next Treasury bond sale, and Unkle’s gotta cough up $10B out of the budget. The first week’s a cinch, the second one too. Pretty soon, the Mad Money Jar’s empty, and it’s time to print phoney cash. Ow.  That’s why the Fed jumped the rates. Jar’s empty. 

If you try to peddle the Treasuries at whatever the market will bear, they’ll have to discount them to move if the Chinese ain’t buying. Discounting principal is the same as jacking up interest rates.  See Fed. 

Remember that.

Trump is trying the game of acting all weird and crazy so the ChiComs will get spooked.  Ain’t happening.  They believe that foreigners are pretty much a dead-end branch of the hominid clan.  We’re contemptible pets, in their eyes.  Really, we should be put in a zoo, the Han figure.

Rudeness is not intimidating in Asian culture – it’s contemptible.  It’s what subhumans do.  Trump being rude makes him appear weak and uncontrolled, not macho.

So when Trump goes to them and tries to get them to take 50¢ on the dollar, they’ll tell him to get lost.  They’re already dumping US loans, enough that the Fed had to jump interest rates to keep up.  If they float actual Treasuries that they already own on the open market, all hell will break loose.  A full-scale bond dump will shut down new Treasury sales completely – there’s bonds all over the damn place.  And the Treasury will have to discount them 25% to make them move.  That’s a massive jerk in interest rates that the ChiComs can pull off – all by themselves.  It will crater the US economy.  Housing prices will drop 20% or more if the bond market tanks and interest rates soar to 15%.  And the Chinese can do it, no matter what the Fed says.

And they’re doing it.