If China’s money & credit growth is spent on projects which increase productivity and reduce waste, the expenditures are beneficial no matter how financed. The initial inflationary effects of bank financing are quickly overcome by the larger output and lower unit costs.

Debt incurred which reduces unit costs of production and promotes the health and welfare of the population obviously is “good” debt.

It’s not that bad. There’s only a 7 or 8 hour difference between Frankfurt and Tokyo.

I dare say that European foreign exchange reserves managers buy yen treasury bills in London because they do not want to get up early enough to buy them direct from Tokyo!

Nothing has changed. Russia, formally the epitome of state controlled economies, did not use the ruble in its foreign exchange operations. Since all trade with the Soviets was monolithic, it was to their advantage to establish a single money center bank through which all foreign financing could be channeled. Their LONDON BANK was one of the first to become a part of the Euro-dollar system, an unregulated system of money creating banks operating on the principle of prudential reserves, as contrasted to regulated legal reserves.

London Banks could not compete without offering privacy, security, and protection of their international clients’ assets and information, i.e., a tradition of bank secrecy.

Jesper may be right, but with bank lending so weak in Japan and with the banks there very liquid and looking for business, why would anyone buy Japanese money market paper in London? Enlighten me, please.

It hurts to see someone with a Chinese looking name (but not spelled in Pinyin) show so little understanding of Chinese history beyond the propaganda, primary school or readers digest level. As you should know, China (Kangxi Emperor) had a few frortesses on an island (previously under tribal control, like most of the western Pacific islands at the time) then usually called Formosa, primarily inhabited by non-Han people, taken from the Dutch East India Company, who had in terun tken it from the Portuguese (the pirate admiral Coxinga did this at great cost with some help from the Portugues/Jesuits who were accepted at Kangxi’s court) . Kangxi then decided to populate part of the East coast of the island with Fujianese people, who were not particularly keen. For 250 years the Island was neglected until the Japanese obtained it in the late 19th cntury. Contrary to the Koreans, the Taiwanese were not unhappy with the Japanese because they finally had a government that did not quite treat them s equals, but at least built schools, hospitls, railways and introduced modern sanitation. In the 1920s (as several Taiwanese friend have assured me), Taiwan was probably the most developed part of what is now China outside Shanghi and Tianjin. In 1949 the mainlanders came and made a big portion of the Taiwanese even more pro-Japanese than they already were. I could go on..I hope you catch my drift.

But anyway, can you explain what makes you utter all these nonsensical comments that no one takes seriously and take up a lot of space. Does it have some function?

the apparent sell off in UK holdings isn’t a real sell off — it is the product of the data revisions that follow the release of the US survey data in June. Basically, some treasuries and agencies that the US thought it sold to investors in the UK (tracked via the TIC data) turn up in the hands of investors around the world, not in the hands of UK investors when the US surveys actual holdings rather than tracking sales. And the real reason for the “China” not “oil” argument is that the biggest upward revisions (offsetting the downward revisions for the UK) have come from China.

I confess that I cannot discern by eyeballing a closer correlation between oil and China “foreign asset”.

I will defer to your hard work.

Looking at your UK holdings patterns with exception of 2001 there is a build up through, and then apparently a sell off, coinciding with end of financial year. Could this be related to company transactions then? Or is it distribution?

Must say I was initially favouring oil due I think to timing of increases in UK deposits from BIS data. Also I think I remember a pattern of large increases in UK deposits in Citicorp annual report.

This of course could be due to either of the parties you are mooting.

DC – I assume you live in US since your comments surface in US time zone. [EDITED]America was built on Italians, Irish, Chinese, and Hispanics who came here looking for a better life and integrated into society. Most have done that successfully and are proud to be American for affording that opportunity to them. I’ve met people like you who enjoy the American living standard but bash and fault it at every turn. [EDITED]