tagged w/ Treasury Holdings
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China may soon call time on Western quantitative easing. More worryingly, the language she is using is far from friendly.
In a report issued last month, the Dagong Global Credit Rating Company praises "emerging creditor countries" for preventing the collapse of "debtor economies" during the recent crisis, but stresses the "vulnerable position" of America, whose "excess issuance" of dollars has triggered a "global credit war" that "arouses all the countries in the world to take various credit resources as a financial weapon to safeguard the national interests."
Dagong blames QE for increasing exports of capital and raising international commodity prices, causing price and asset inflation in developing countries where, according to a cited World Bank estimate, net capital flows to stockmarkets soared by 42% and to bond markets by 30%.
Signalling that a US Treasury bond sell-off is a "financial weapon" that China may be prepared to use in its defense, Dagong notes that creditor nations stabilised the situation in 2010 not only by "continued buying" of treasury bonds but also because they "continued to hold" them.
China is by far the biggest holder of US Government debt - $891.6 billion at December 2010, according to the US Treasury. This is about the same as a year before, but ignores possible purchases via intermediary nations. In 2009, ex-Roubini associate and now NEC adviser Brad Setser plausibly argued that much of the British buying was on behalf of the Chinese.
This is all the more credible because of the UK government's own deep and long-standing financial troubles: Why would one near-bankrupt lend to another? In December 2010 the ostensible UK holding was $541.3 billion - triple the figure from 12 months earlier. Setser's January 2009 estimate was that taking US Treasuries and Agencies together, China controlled $1.425 trillion-worth.
The UK has since increased "its" stake in Treasuries by over $360 billion, though China appears to have been reducing its exposure to Agencies for some time, according to a July 2009 report from the Congressional Research Service:
Data from the Department of Treasury indicate that in recent months China has sought to reduce its holdings of LT U.S. agency debt, while increasing its holdings of short-term U.S. Treasury securities.
This shift from Agencies to Treasuries, and from long- to shorter-date debt, is itself a subtly troubling trend.
Total Chinese foreign exchange reserves - mostly denominated in dollars, one understands - were $2.45 trillion in June 2010 and the current figure may be over $2.8 trillion. The effect of currency depreciation on its foreign assets is massively expensive to the People's Republic, and it is little wonder that she should be reconsidering her investment - and musing on using her leverage to further other objectives.
Officially, China repudiates the notion of using its foreign exchange reserves as an "atomic weapon", but the use of an ostensibly unconnected agency to convey diplomatic messages would not be out of character. Founded in 1994, Dagong is based in Beijing, and in 2008 its chairman Guan Jianzhong received a "special government allowance" - not merely a monetary prize but a sign of governmental approval.
America still has the world's largest economy, but of developed nations it is also one of the most dependent on refinancing in 2011 - third in GDP terms (27.6%) after Japan and Iceland, and first in absolute terms.
As early as 2007, Brad Setser gave evidence about the US' economic vulnerability to foreign sovereign wealth funds, to the USCC. The US-China "Strategic Economic Dialogues" also began that year and one suspects that some home truths were being told even then. Now the noises are being made more publicly and discordantly, if still at one remove from official sources.
It is getting more serious, and Dagong is not hopeful:
The United States, as the biggest country involved in sovereign debt crisis around the world, will continue its quantitative easing policy when the country is in danger, and the world credit war will be escalated due to the overflow of US dollars.
Clearly we are still at the shot-across-the-bows stage, but we have come a long way from four years ago.
http://seekingalpha.com/article/255210-global-credit-warfare-china-preparing-for-a-treasury-bond-sell-offChina may soon call time on Western quantitative easing. More worryingly, the language... more
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Malcolm Tucker of the Greater London Industrial Archaeology Society has written a letter objecting to the demolition of the grade II listed Victorian Pump House situated next to the Battersea Power Station.
The letter is both a detailed inventory of the archaeological and cultural value of the site that “developer” REO/Treasury Holdings want to raze to the ground in the name of making more money, and a demolition of the arguments for demolition in the recently circulated Planning Policy Statement 5 Assessment, prepared by Donald Insall Associates Ltd and dated September 2010.
http://www.spectacle.co.uk/spectacleblog/battersea-power-station/greater-london-industrial-archaeology-society-pump-house-demolition-objection-letter/Malcolm Tucker of the Greater London Industrial Archaeology Society has written a... more
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The Battersea Power Station Company, the charitable organisation seeking to protect the Battersea Power Station, have submitted their objection to Treasury Holding’s application to demolish the nearby Grade II listed Victorian Pumping Station. The pumping station is widely recognised as of historic and architectural interest by a wide range of authorities including: the Victorian Society; Save Britain’s Heritage; the Newcomen Society; the Council for British Archaeology; the River Thames Society; the West London River Group; the Battersea Society; the Kew Bridge Engines Trust, and the Greater London Industrial Archaeology Society.
The only justification offered by REO (Treasury Holdings) is a spurious notion of “public benefit” where the developer is attempting to wrap up their desire to build a few extra offices or flats on the site as a “public benefit”. The only other, even weaker, argument seems to be the idea that the pumping station must be sacrificed in order to save the Battersea Power Station. As the letter below makes clear there is no real connection. The owner has a duty of care for both Grade II listed buildings. Besides many critics would claim their plans to “save” the power station by turning it into a Westfield style shopping centre and knocking windows all along both side exterior walls is actually a mindless act of vandalism that destroys the building’s architectural integrity. Put together with REO’s application to demolish the chimneys and replace with plastic ones this is “development” 1960’s style. Is it also “conservation” 2010 style? Is there any imagination out there??
If you would like to register your objection it is never too late!
Write to : planningapplications@wandsworth.gov.uk
http://www.spectacle.co.uk/spectacleblog/battersea-power-station/battersea-power-station-companys-objection-to-demolition-of-the-victorian-pumping-station/The Battersea Power Station Company, the charitable organisation seeking to protect... more
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REO continue to shoot themselves in the – what by now must be, given their perilously brittle financial circumstances, bare – feet. Their persistent corporate prostitution of the inner sanctuary of the Battersea Power Station (for yous philistines who don’t know is now renamed THE BOILER ROOM) rips away any last layer of credibility from the assertion that the iconic chimneys of Battersea Power Station should be demolished for safety reasons.
http://www.spectacle.co.uk/spectacleblog/battersea-power-station/chimneys-standing-firm/
This declaration is a major part of REO’s planning application, stating that the chimneys are monstrously dangerous actually, given that they could fall down imminently. This is the reason, according to Planning Director of REO and Treasury Holdings Jeremy Castle, that there is a strict thirty metre exclusion zone around each of the chimneys at each event. Quite how they maintain this INSIDE the structure of the power station is a mystery.
What undermines these claims is that there have been a slew of conferences, dinners and even large scale events in and around the power station throughout the year; from the recent Red Bull X-Fighter Motorcross event to the upcoming SHINE benefit dinner in November (where a canopy and walkway to access The Boiler Room will be constructed for guests). These events, inclusive of the Paul McCartney gig inside the station back in July, would not be permitted to take place if there was any truth to these safety concerns, so this fallacy of collapsing chimneys is but a clever marketing shoehorn to strengthen the application process. Which ironically of course, will be slowed down to increase the value of the land if the application is accepted.
This flagrant contradiction only adds to the controversy surrounding REO, given that they are over a billion in debt, unable to pay interest to creditors, heavily criticised by heritage institutions such as the Victorian Society, Kew Bridge Engine Trust and the Greater London Industrial Archaeology Society, and planning an unwanted underground line extension. The current plans for the station, which you can read more about on our Spectacle Battersea Blog, also include planning requests for an office and leisure complex, riverside access, a hotel, and 3,700 luxury flats.
To send in a written objection to the plans to demolish the station and its neighbouring Grade II* listed sister pumping house, address it to Bob Leuty at Wandsworth Council, planning applications@wandsworth.gov.uk . The deadline for written objections is 5pm tomorrow (30th September), and you can also contact your Wandsworth Councillor and ask them what their view is on this before deciding how to vote.REO continue to shoot themselves in the – what by now must be, given their... more
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REO stops paying interest due to creditors
TREASURY Holdings-backed property group Real Estate Opportunities (REO) owners of Battersea Power Station did not pay interest due to a group of its creditors at the end of the August.
REO is apparently in “ongoing restructuring negotiations” with the National Asset Management Agency (NAMA), Lloyds Bank and others about its loans. The company announced yesterday: “taking into account the status of the negotiations, the company has determined that the interest payment due … will not be made”, a statement that seems to imply that REO could pay the interest if it wanted to.
It owes its banks around €2 billion and in June said it would not be in a position to repay a €450 million debt due in May 2011. It hired advisers to help it tackle this issue.
Perhaps they could cut back on luxuries and use their tea bags twice.
The future of one of UKs best loved buildings is in the hands of mega debtors who claim they will use “their own money” to build the “essential” Battersea tube extension.
http://www.spectacle.co.uk/spectacleblog/battersea-power-station/power-station-owners-reo-stops-paying-interest-due-to-creditors/REO stops paying interest due to creditors
TREASURY Holdings-backed property group... more
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