This is called "capital flight"
It usually only happens to poor countries, and it never ends well.
I saw an article in Le Monde saying that Ursula von der Leyen, the President of the EU Commission - the closest thing the EU has to a Prime Minister - is holding talks with senior officials from China' Finance Ministry. I wonder what they're talking about... 
S E E D E D C O N T E N T
Source: Xe.com
Today's post is about something that's nerdy and technical, but also incredibly dangerous and terrifying . Usually, Americans can get by perfectly well without ever thinking about the intricacies of international finance and the bond market. But these things actually have the power to devastate America's economy like nothing else. Our fabled prosperity is like a town built on the back of a giant sleeping dragon, and the dragon's name is "international finance and the bond market". Normally, we go about our business in peace, not even thinking about the dragon slumbering beneath our feet. But if one day it wakes up, we could all burn.
It may be waking up right now.
The chart you see above is the U.S. dollar to euro exchange rate. When Trump took office, one dollar could buy you about 0.97 euros. Today, it can buy you only 0.88 euros. The dollar is absolutely plunging, at least as of this writing.
It's important to realize that this is not typical for a trade war. Usually, when you put up tariff barriers, your currency gets stronger , not weaker.1 That's how it went when Trump put up tariffs against China in his first term.
That's not what's happening now, though. What's happening now is that a bunch of investors are selling large amounts of U.S. bonds and other assets:
The dumping of these assets weakens demand for the dollar, because people are taking the dollars they get from selling the U.S. assets and swapping them for other currencies or commodities — euros, yen, gold, etc. — so that they can invest elsewhere. Thus, the dollar is going down. This effect is so strong that it's overpowering the normal effect of tariffs — by a lot.
When people sell a lot of U.S. bonds, as they're doing now, the interest rate on those bonds — called the "yield" — goes up.2 Yields on 10-year U.S. Treasury bonds from 4% to about 4.5% since April 4:
Source: CNBC
Now, it's helpful to understand that U.S. bond yields going up while the dollar goes down is actually a highly unusual and scary situation .
Usually, Treasury yields and the dollar move together, because usually, when investors look at U.S. government bonds, they don't ask "How risky is this bond?" — instead, they only ask "How much money will this bond pay me?" When yields rise (because of Fed policy or economic conditions), investors buy more Treasuries in order to get those higher returns, and this buying drives up the dollar. When yields fall, investors sell, and the dollar goes down. So yields and the dollar move in the same direction.
But ever since Trump announced his "liberation day" tariffs, that long-standing correlation has suddenly and dramatically reversed:
What's going on? Why are investors dumping America's bonds? One reason has to do with the intricacies of financial trading. The Economist has a good explainer on this, and Allie Canal has a good thread about it as well. Basically, Trump's tariff announcements — and his later partial walk-back — caused a lot of volatility in markets, which caused a lot of Wall Street traders' bets to blow up. That meant the traders had to raise cash in order to pay back loans they had taken out in order to make those bets. And the easiest way to raise cash quickly is to sell Treasury bonds. So this was probably part of what was going on.
But this doesn't explain the fall in the dollar. Normally, when Treasuries get sold off, people park their money in cash, instead of moving it overseas. This time, a bunch of investors actually pulled their money out of America entirely.
In other words, for the first time in many decades, the U.S. has experienced capital flight . And if it continues, the consequences for the U.S. economy could be absolutely dire.
Suddenly, the world is treating America like a developing country
Whatever
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hat's happening now is that a bunch of investors are selling large amounts of U.S. bonds
Pssst. It's china.
Don't bother to cite a source, or explain why China might want to get rid of assets from a country that has declared economic war.
Nah!
Just be snarky. It's so much easier, and there are so many MAGAs here who don't give a rat's ass...
It's not self evident why China would be trying to drive up the cost of American bonds right now?
Europe has come to a conclusion: The time is ripe to test the strength of this relationship with the United States by seeing other people.
Yup.
Trump has almost four years, yet, and everything looks set to produce a permanent MAGA oligarchy/kleptocracy. So those nations he chases away... may very well not come back.
Our president is drunk with power. It can be argued that it is why our constitution won't allow for a king. Such 'raw' power in the hands of an America president upsets the balance of the senses.
... unless of course the Constitution's checks and balances don't work. Which may very well be the case, with Republicans fascists in control of Congress and the courts.
Well, you may know this, but I will share it with you anyway. We the people have the power to effectually bring about change in our halls of power. Do not despair. Get busy effectuating!
There are people that are reminding me, you, us that newly installed 'strong-holds' can and yet are being pulled down! Even before they 'actuate' themselves. Let's 'be' the change we want to see.
Yes, they want to run into the arms of the country that is supplying Russia not only with the goods necessary to make the Ukrainian invasion possible, but whose citizens are actually fighting for Russia. Remember the two weeks the EU pretended to care about "Free Ukraine?"
Good times.
Of course, the EU faces deflation by China dumping products on their market and that may cause their love affair with the most murderous regime on planet earth to be short lived. Principles obviously play no role in EU foreign policy, but having their industries wrecked by China might cause second thoughts.
I have no idea what the hell you are talking about. Internal EU conflicts and resolutions are not what is being discussed here, per se.
This discussion is more interlaced with the saying: "Politics makes for strange bedfellows" in that the complexities of trade can lead a nation to have friendly relationships with nations of 'assorted' temperaments.
As to your statement, "the most murderous regime on planet earth" - I remind you that Trump often says, “There are a lot of killers. Do you think our country is so innocent?” The implication is mind-blowing.
Furthermore, since Trump is 'cozy' with Russia and once or twice visited with China's Xi - why can't the EU see whomsoever it wants in the larger scheme of relationships?
have no idea what the hell you are talking about.
The EU's relations with China and the problems the EU will face when China dumps product on the EU to avoid American tariffs. I can't make it any simpler.
The CCP has murdered tens of millions of its own citizens since the end of WWII. Do you think the US has? Do you think American and China are the same, or are you can you tell the difference between the two?
hy can't the EU see whomsoever it wants in the larger scheme of relationships?
Of course it can Who said otherwise? Just don't pretend anything other than greed is at play. When you are reduced to equating a Country that has spent billions supporting Ukraine with one supplying Russia with arms and soldiers, it's silly to pretend anything else is at play. It's impossible to pretend there's no difference, unless you are pretending to support Ukraine and oppose the Russian invasion.
I still don't know what/why the hell you are talking about this to me. My comment was about the EU seeing other people of its choosing. Your comeback was about something overflowing with passion about how America should feel about the EU seeing others.
Or what your emotional 'output' over EU/China/U.S. relations has to do with higher or lower tariff rates around the world, the genesis of all this new business 'conduct.' These nations are 'big boys and girls' that can 'see' whomsoever they want and still 'see' each other. And, at the end of the day, they just might 'see' more than one at a time.
As for a lecture on whose killed their 'thousands and/or tens of thousands' - save it for a more appropriate topic on international morality.
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I am 'full' of your pivoting dialogue. "thousands and tens of thousands" -is a metaphor. . .aw nevermind! (Sigh.)
The E.U. can 'see' whomsoever it wants has been made clear. It's their choice what kind of relationship that blooms.
The current president of the United States said, pretty recently, that Ukraine started the war. His allegiances in this war are highly questionable. Until you are prepared to reconcile that fact you are not worth listening to.
That's not a metaphor. You just used a different number.
ee' whomsoever it wants has been made clear.
Again, no one has said they can't. Just be honest about who they are dealing with. If they want to dance with the country supplying Putin with supplies and troops, that's their choice. Countries voluntarily allied themselves with the Nazis, too.
His government funds Ukraine. China funds the Russian army and now sends its people into combat.[✘]
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Truly bizarre comments. Did Ukraine start the war or did Russia? Tell Trump when you figure it out.
I Samuel 18:7:
7 So the women sang as they danced, and said:
“Saul has slain his thousands,
And David his ten thousands.”
I rest my case. Moving back to the topic.
And this lies at the crux of what has 'everything' tossed up in the air. Trump wants to make private 'merriment' with the great minds of the world! And many countries, having been patient with his foolhardiness in how he handled themselves in matters of individual countries' importance are demonstrating what, we, the U.S. was warned and told: NATO and European Union Leaders have taken measures to shore up their defenses and economic and trade policies.
With Russia being. . . Russia under Putin. The EU can not wait on the whims of a petulant U.S. president; by the way who can only make agreements in four year increments. . .as being demonstrated by his hasty EOs ahead of any lame-duckiness expected to overtake him in the service of his time.