The dollar fell to its lowest point since the financially disastrous month of August, 2008, against an array of world currencies, including an all-time low against the Swiss franc.
Pimco, the world's largest bond fund manager, is now short in Treasurys. The fund sold short all U.S. securities following the mid-week announcement by S&P, which included the opinion that the unsecured debt of Fannie Mae, Freddie Mac and the Federal Home Loan banks is also now considered negative despite having received $145 billion in government bailouts.
One analyst said, “They might know the math, but they're using it to design new deck chairs for the Titanic. They should be using it to figure out how to get all those people off that boat in a hurry.”
He pointed out the fact that the Chinese credit rating agency had made the same pronouncement regarding U.S. Treasurys in November.
The Governor of the People's Bank of China, Zhou Xiaochuan, said last week that the bank is too liquid in U.S. Treasury Bonds and intends to get short in the securities in the near future. China is the largest holder of U.S. Treasury bonds in the world.
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