Posted on 06/01/2009 10:50:52 AM PDT by balls
BEIJING -- U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
A major goal of Geithner's maiden visit to China as Treasury chief is to allay concerns that Washington's bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.
China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China's total U.S. dollar-denominated investments could be twice as high.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
The Beijing-based Global Times greeted Geithner by publishing a survey of Chinese economists who called big holdings of U.S. debt "risky."
Geithner renewed pledges that the Obama administration would cut its huge fiscal deficits and promised "very disciplined" future spending, possibly including reintroduction of pay-as-you-go budget rules instead of nonstop borrowing.
"We have the deepest and most liquid markets for risk-free assets in the world. We're committed to bring our fiscal deficits down over time to a sustainable level.
"We believe in a strong dollar ... and we're going to make sure that we repair and reform the financial system so that we sustain confidence," he said.
Geithner also offered strong backing for a bigger Chinese role in international policymaking.
(Excerpt) Read more at gold-speculator.com ...
Well, there seems to be a potential ‘safe haven’ for those dollars besides treasuries....
http://blogs.wsj.com/economics/2009/06/0....
June 1, 2009, 5:00 AM ET IMF Bonds Are Coming Soon, but You Won’t Be Able to Buy Any
By Bob Davis
The International Monetary Fund is putting final touches on its plans to issue its first bonds. Russia has already said it would buy $10 billion of the bonds, which would be priced in the IMF’s quasi-currency, “special drawing rights.” SDRs are a basket of currencies consisting of the euro, yen, pound sterling and U.S. dollar. As of Friday, 1 SDR equals $1.55.
China, Brazil and India also have said they are interested in buying IMF bonds, with China likely to purchase more than $20 billion of instrument. The IMF wants to issue bonds as a way to build up its lending war chest as the global economic nosedive continues.
But don’t start lining up at the IMF to buy some yourselves. Only the IMF’s 185 member nations and some central banks will be eligible to purchase them and trade them — among themselves. Some at the World Bank worry that the IMF bonds might push up borrowing rates somewhat for the Bank, though IMF officials doubt the IMF bond issuance will be large enough to affect World Bank borrowing costs much
And don’t expect to see a physical bond certificate or coupons. The IMF isn’t designing a paper bond with some fancy lettering or a picture of, say, the IMF headquarters or John Maynard Keynes. All the transactions will be handled electronically.
(’Basket of currencies’. You knew that was coming.)
The speech was at Peking University ... which is comparable to Princeton, except they probably don’t have courses on ecofeminism and the like. It attracts the best and brightest of China, which, for a variety of reasons, are better and brighter than their US counterparts on average. But their real advantage is that the Chinese students are taught both classical economics and Marxian economics. They know first-hand which one works. Their American counterparts are taught only Keynes and Marx, and learn nothing related to the real world. Thus, the Peking University students can detect economic BS much more readily than American Ivy League students.
This is not to say that Chinese PU students don’t face pressure to be politically correct; it’s just that Chinese PC isn’t as stupid as US Ivy League PC.
Between gold, oil, coal, materials to build factories, military equipment and technology, etc, etc, they've got and endless number of alternative uses for spare cash.
The hard truth is if the Chinese ever withdrew enough assets from us to destabilize our economy we'd have to quit buying all that stuff they make, which would tank their economy. They're trapped.
We're not "too big to fail", and we'd be foolish to believe otherwise. The Chinese aren't trapped. There are always alternatives. If their economy tanks, the best way for the Chicom leadership to keep the support of their population is to arouse nationalist fervor by getting in a war with us.
Last Comic Standing
perfect!
Excellent posts. As all of you have found, the average Chinese is no Commie (at least in Marxist-Leninist terms) and few find being a Party member very attractive. Members of my extended family consisting of uncles, aunts and cousins have pretty much stated that if the Chinese government wants to call the economic system Communism, Socialist Capitalism or whatever, they could not care less. What is most important to these relatives in China is making money.
My concern is their zeal for making money is not tempered by much ethics. It sort of reminds me of Hong Kong in the 70s and 80s when people were selling everything - caveat emptor, indeed! Although the government is clamping down on really outrageous stuff by big firms, a lot of small-time crooks, including businesses, get by. When I explained the Madoff scandal to one of my cousins, he asked, “Again, how does this scheme work?” I didn’t repeat it for fear it would give him ideas.
He is a Commie planted Agent in Place from way back:
Early life and education
Geithner was born in Brooklyn, New York.[2] He spent most of his childhood living outside the United States, including present-day Zimbabwe, Zambia, India, and Thailand where he completed high school at International School Bangkok.[3] He attended Camp Becket-in-the-Berkshires-for-boys, a summer camp located in western Massachusetts. He then attended Dartmouth College, graduating with a B.A. in government and Asian studies in 1983.[4] He earned an M.A. in international economics and East Asian studies from Johns Hopkins University’s School of Advanced International Studies in 1985.[4][5] He has studied Chinese[4] and Japanese.[6]
Geithner’s paternal grandfather, Paul Herman Geithner (1902–1972), emigrated with his parents from Zeulenroda, Germany to Philadelphia, Pennsylvania in 1908.[7] His father, Peter F. Geithner, is the director of the Asia program at the Ford Foundation in New York. During the early 1980s, Peter Geithner oversaw the Ford Foundation’s microfinance programs in Indonesia being developed by S. Ann Dunham-Soetoro, President Barack Obama’s mother, and they met in person at least once.[8] Timothy Geithner’s mother, Deborah Moore Geithner, is a pianist and piano teacher in Larchmont, New York where his parents currently reside. Geithner’s maternal grandfather, Charles F. Moore, was an adviser to President Dwight D. Eisenhower and served as Vice President of Public Relations from 1952-1964 for Ford Motor Company.[9]
http://en.wikipedia.org/wiki/Timothy_Geithner
but but but tiny timmy is a genius..............
Most enlightening thing I have read lately!
I stopped and made a mental circle of related names and causes with each personal, business,or foundation mentioned.
WOW, talk about concentric circles of influence!
That's what he though he was saying. What he actually said in Chinese was, "Chinese asses are very soft."
Thus, the laughter.
If Geithner - the Kool-aid swilling self loathing “intellectual” and Obama flunky is the “brightest man available” for the job — then we’re surely DOOMED.
The Chinese were laughing about (among other things) the fact that they now owned HUMMER.
A major goal of Geithner's maiden visit to China as Treasury chief is to allay concerns that Washington's bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds. China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China's total U.S. dollar-denominated investments could be twice as high. "Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s. His answer drew loud laughter from his student audience...Maybe the laughs were from his Chinese? He studied there, maybe he tried some halting words in the local language, but wound up saying "I have goats in my pants."
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