Our Dear Friend China

What everyone thinks: China will always buy US Treasuries. It helps to fund the US so it can continue to spend recklessly and have Americans buy more crap from China.

What everyone should know: China reduced its holdings in Dec. 2011 and since then, has only been recycling its holdings. This means that the US needs more external buyers (Japan, UK, other country) or the Fed will have to buy our debt (say, 60%-75% -- FYI, this is money printing in the 20th century).

Now where could China be spending its surplus?

Source: http://www.zerohedge.com/news/2012-11-17/china-persists-refusing-buy-us-paper-foreign-ltm-purchases-treasurys-plunge-three-ye