From India's Economic Times via MSN, December 10:
Europe US debt sell-off: European governments are quietly debating an extraordinary economic countermeasure as fears grow that US president Donald Trump may strike a deal with Russia that sidelines Ukraine and threatens continental security. According to internal assessments shared within Europe, officials are considering a drastic response: dumping vast holdings of US government debt to destabilize the American economy if Washington abandons its commitments to Ukraine.
Europe Weighs Drastic Financial Response as Trump-Russia Deal Fears Grow
The discussions come as American and Ukrainian representatives met on November 30 in Miami to continue working toward a potential peace agreement, as per a report. Secretary of State Marco Rubio, Trump’s Russia envoy Steve Witkoff, and the President’s son-in-law Jared Kushner participated in the negotiations, as per The Express report. After what was described as a “fragile” session, Trump told reporters aboard Air Force One that there was “a good chance we can make a deal.”
But European leaders remain deeply uneasy, wary that Trump may be moving toward a geopolitical arrangement with Vladimir Putin that ignores NATO allies’ security interests.
Could Europe Trigger a US Treasury Sell-Off? Inside the ‘Nuclear Option’ Debate
A European intelligence agency has reportedly circulated internal evaluations outlining “commercial and economic plans” the Trump administration has been exploring with Russia behind closed doors, as per The Express report. This has intensified concerns that the White House could sacrifice European security in pursuit of American advantage.
According to officials who spoke to the WSJ, European leadership has begun weighing what some describe as a “nuclear option”: the mass liquidation of US Treasury securities held by European governments.
How a Coordinated European Sell-Off Could Shock the US Economy
A coordinated sell-off of this magnitude could shake the American financial system, hammer the value of the US dollar, and trigger a liquidity crisis. Economists warn the impact could be more severe than the 2008 financial crash, potentially sending borrowing costs soaring and freezing large parts of the banking sector.
A prominent European economist reportedly said that such an action could represent one of the most significant external economic shocks in modern US history, as per The Express report....
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New York Fed: "Do You Know How Your Treasury Trades Are Cleared and Settled?"
My first thought was "this is a (very) subtle reminder to China that should they decide to dump U.S. Treasuries the clearing and settling of the trade is really, really important."And here, with a more reasoned argument is Alhambra Investments....
Delaying or refusing transfer and settlement is sometimes argued as an action the U.S. government could take if China raises the stakes in the trade dispute.The downside is such a move would shock other players in the govvy markets, perhaps to the point they would reconsider their participation.
So, the Fed probably isn't warning, subtly or otherwise.
Besides, if China wanted to dump their holdings, the ultimate end-game action for the U.S. is to have the Federal Reserve go bid for a trillion or so and ask the Chinese "What else ya got?"
On to Liberty Street Economics, not coincidentally housed in the same 33 Liberty Street, NYC NY building as the Fed's open market operations desk....
