How sad is it that Treasury Secretary Timothy Geithner has to spend a few days grovelling before our Chinese creditors to try to stop the ongoing meltdown in the Treasury and currency markets? Am I the only one who thinks this is a truly sad state of affairs? Am I the only one who wishes our government would start taking steps to change things — rather than just spout a bunch of meaningless blather about bringing down deficits and debt levels while enacting policies that have precisely the OPPOSITE impact?
Anyway, if you’re interested in hearing China lecture the U.S. about its fiscal policies, take a crack at this Bloomberg story …
“Yu Yongding, a former central bank adviser who acted as the interviewer for the China Daily newspaper, told Geithner: “I worry about details. We will be watching you very carefully.”
Or how about these gems from the Washington Post, which notes that despite Geithner’s happy talk, China is not pleased with the way events are unfolding:
“Geithner’s remarks stand in sharp contrast to the commentary in China’s official propaganda papers.
“An editorial in the English-language China Daily said it will be “regrettable if [Geithner] underestimates and shuts his ears to voices from China’s civil society,” noting that there are worries that “Washington’s mushrooming deficit, generated by massive government borrowing to fuel its economic recovery plan . . . will undermine both the dollar and U.S. bonds.”
“The Global Times, which is affiliated with the Communist Party, said an online poll found that 87 percent of respondents believe China’s dollar-assets are unsafe. The paper concluded, “Ordinary Chinese people are discontent with the declining value of China’s huge foreign exchange reserves denominated in U.S. dollars.”
“And the Economic Information Daily, which is part of the official New China News Agency and affiliated with the State Council, in a headline demanded to know of Geithner: “How do you propose implementing fiscal discipline? How will you maintain the stability of the dollar after the crisis?”
Today will be an interesting day. The dollar attempted to stabilize yesterday, rallying off its lows. But the Dollar Index is now getting pasted again — down 42 bps to 78.74 as I write. Gold is up about $7 an ounce, but still below yesterday’s high.
Related posts:
- All you do to me is “Talk, Talk!” Remember that catchy 80s song “Talk, Talk“? That’s what I think of when I read stories like this. Treasury Secretary...
- Dollar debasement keeps on keeping on The dollar’s collapse is gathering steam in early trading today. The broad-based Dollar Index is down 38 ticks to 76.95...
- The surprise of the day: Bernanke actually acknowledges the dollar decline The text from Fed Chairman Ben Bernanke’s speech in New York was just released. For a change, he actually mentioned...
{ 5 comments… read them below or add one }
No, you are not the only one who feels this is a sad state of affairs. We look desperate (maybe that’s because we are desperate). It’s truely pathetic. But the average idiot will believe the headlines, at least for today, until something else comes out in the headlines to the contrary, and then they will have forgotten about Geithner’s China escapade. It’s just like the pending home sales jump today. What a joke. We all know pending is not yet a sale. They are still falling out of escrow, the inventory is still rising, and prices continue to decline. But, of course, the headlines don’t tell you that. The headlines hope the average idiot will believe the pending home sales numbers are something that mean a return to the same irrational economic growth of three and four years ago.
I just read the Washington Post article you cited above. Here is another thing the genious said: “Geithner emphasized that he has been speaking about these issues with his counterparts for several months now and the main purpose of this trip was more to lay the foundation for long-term cooperation rather than discuss specific issues.” Geithner is good at not discussing specific issues.
Mike Larson Reply:
June 2nd, 2009 at 2:50 PM
When they say the purpose of the trip is not to discuss specific issues, that means they are making no headway/progress whatsoever. Or at least, that’s what my “government-jargon-to-plain-English” translation machine says. The reality is we have no leverage here, and the Chinese are holding all the cards because we need to continue to fund our mind-boggling deficits.
Mike,
Is the Bond Market thrashing a threat to JPM with it’s huge exposure (trillions) to treasury derivatives?
I do subscribe to your service, so I hope your finding the best ways to profit from this opportunity.