Surprise, surprise. Treasury Secretary Geithner backed off the well known and well documented currency manipulation by China. Anyone believe that's because China now owns the United States?
Treasury Secretary Timothy Geithner pushed Group of Seven officials to soften criticism of China last month after his accusation that the nation was “manipulating” the yuan strained ties with the U.S.’s second- biggest trading partner, said a person briefed on the matter.
G-7 finance ministers and central bankers on Feb. 14 welcomed “China’s fiscal measures and continued commitment to move to a more flexible exchange rate.” By contrast, the group in April 2008 pressed for “accelerated appreciation” of the yuan.
Geithner’s behind-the-scenes effort came just weeks after he publicly accused China of “manipulating” its currency during his Senate confirmation hearings, drawing criticism from the Chinese. Donald Straszheim, a former Merrill Lynch & Co. chief economist, said the G-7 shift may signal the U.S. Treasury won’t label China a manipulator in a report due April.
I suspect
reading this, that they own more than just US debt. Something tells me, that America is in, to put it lightly, a crowded room....if you know what I mean.
Unless, we (households) keep saving a tremendous
amount. Geithner needs China. He needs China to keep buying treasuries.
I like this part:
I read a report several months ago that the Chinese government instructed the government-backed "think tanks" to figure out ways to exert leverage over its U.S. holdings. Are we starting to see that? Will we start seeing it more particularly with trade?
RebelCapitalist.com - Financial Information for the Rest of Us.
The initial criticism of currency manipulation
is what worried me most about Geithner. AIUI he was one of the IMF's point men in the East Asia crisis (he majored in Asian Studies and speaks Mandarin) and if he's criticizing China essentially for repegging to the dollar then he didn't understand the role of hot money in that crisis. Surely he must have noted that nearly every nation around China was collapsing and that the one nation -- China -- that did not go free market was the one that survived best. Either he's stupid (he's actually very smart -- I met him back in college) or any residual Washington Consensus-think still lies pretty thick.
Defloating the yuan hurts the US. And having the de facto global reserve currency has downsides as well as benefits. But if central currency manipulation prevents private currency manipulation such as we saw in 1997 I think everybody benefits.
China here is clearly calling the shots, whether they intend to or not. If that means our Administration gets that the policies of the last 30 years must be discarded, well, that would be a good thing long overdue.
Surprise, surprise, NOT...
Timmy "the fast-draw mouth" Geithner has finally joined a long line of world leaders having to furiously back-paddle after incurring the ire of the Chinese. What was he thinking? I hoped, no I prayed, that Geithner made the currency manipulator accusation to purely appease the domestic China-bashing audience. My prayers have been answered. Seeing Hillary Clinton appealing for more Chinese loans on Chinese TV and seeing the swift assurances made by the the US in response to Wen Jiabao's worries about America's credit-worthiness have convinced me that the Obama team is grounded in reality. A big sigh of relief. Now, onto the next urgent matter: should we offer GE, California, and Florida as guarantees for the debt we owe China?