Oh dear. Our new Treasury Secretary just really pissed off the Chinese Premier. Geithner accused China of manipulating the Yuan (which is kind of true-ish) but we have to be nice to our biggest customer of Treasuries. And Geithner really angered China with that remark.
Chinese people are very big on a concept called, "saving face". Dignity and honor are very big, as well as perceived respect. If you disrespect a partner, they simply pick up their marbles and go away. And this is no time to piss of China when they own $6 trillion in our treasuries but are about the only people left to buy our badly needed sales of bonds. And I fear that they just decided to save face.
Canadian Prime Minister Steven Harper, on his first visit to China - harrumphed into his first meeting announcing that the first thing on his agenda was to discuss China's record on human rights. What an idiot. China got pissed, and stopped buying so much of Canada's natural gas. Harper took a big one on the chin back home for that idiotic move.
I absolutely hated Hank Paulson. But I am nervous about Geithner's insensitivity and lack of decorum in front of a very very touchy and very powerful economic force. Right now, China is buying our treasuries because to abandon them would make the dollar collapse, and China has $6T of them. But you know what? If you insult somebody who has "saving face" as their primary value, they'll cut off their nose to spit their face.
For some crazy reason, the Chinese really liked Bush, and they are not so hot on Obama. This is the first time that the Chinese premier has taken the podium at Davos' world economic summit, and the first thing he did was yell at the U.S.
The dollar is going to crash, and it's going to take the country with it. I really really like Obama, and I do think that the U.S. has a resilient history, but other countries own us lock, stock and barrel right now.
8 comments:
Gary,
It is strange. I always perceived you as a photographer... Yet you are writing some amazingly intelligent posts regarding the economy. I am really impressed.
I do wish you would write one asking idiots to turn off the Rush Limbaughs of the world, quit trying to blame Carter and Clinton for all of our woes, and face the fact that our country is in for a rough ride for far greater reasons than these people never had the power to concoct. Then perhaps we can start working toward solutions. Ridding our country of it's current 2 party system would be a good start in my opinion.
The person who responded to the original "controversial post", that capitalism is our Savior, really needs a wake up call. I feel sorry for people who are so brainwashed and dogmatic.
Keep up the good writing. It is very interesting. Thanks!
Obama is the one who picked Geithner. The president is only as good as the people he puts in office. Do you think George Bush was on the ground looking for WMD's or somebody over there was reporting to him that they had them and he went with it?
It also Interesting that Geithner's picks for his staff and the ethic reform Obama was going to bring. I think Obama is getting a real time wake up call how hard it is to be president, much harder than making campaign promises.
All of these tax issues are started to get embarrassing.
Also what's up with Obama saying they are going to do a bad bank announcement this week and then last minute whoops we are going to hold off on that and look at compensation and bonuses. I think compensation is hardly the issue, and a wall street bonus is not that same a general bonus. I had high hopes that he was going to go after the root of the problem.
If Obama wants to talk about compensation he should take a pay cut from the 400k he is getting paid especially since he wants to raise the tax on over 250k as that according to him makes you rich.
Gold is starting to come back down from Geithner's comment, i'm sure the US did everything in it's power to call a mulligan on that statement, and I can almost guarantee he isn't going to go off script anytime soon.
I agree with Gary. The Keynesian stimulus plans that have been attempted in the past have a history of not working. This stimulus plan isn't exactly purely Keynesian in nature, as it feeds not to the top with a trickle-down vector, but straight to the middle class. This idealogy is a bit optimistic because the relief is not immediate.
The larger concern is the Fed. It is the Fed that reports figures on M1 and M3, and since it is a private banking cartel, there's no way it is going to be accurate in reporting money supply, especially as it is printing volumes of funny money to purchase U.S. Treasuries, Paper Gold spot contracts, the associated naked shorts.
China is playing games too. It actually is supressing the yuan (and that is not going to change with decreased exports in a world recession - higher yuan means more expensive exports). What this all basically means is fiat currency itself is an asset bubble... and these bubbles always burst.
oh - on another note, with regards to Gold Prices, you'll note that Gold typically moved in tandem with petroleum and the dollar. The idea of being coupled with oil was that it was grouped in portfolios with other commodities (that's how lazy fund managers are) and coupled with the dollar because a cheaper dollar leads to cheaper crude, which suppresses inflation pressures, which theoretically would suppress Gold Price as it loses its luster as an inflation hedge.
On another matrix would be the safety factor, and the reason Gold has decoupled from both oil and the dollar, but has not taken off compared to the U.S. Dollar, is that many investment fund managers find safe haven in Treasuries. But nobody is considering what would happen if China stopped buying them!
(Gary wears off on me)
The comment regarding Bush and WMD's and Obama and a pay cut have got to be 2 of the most ignorant things I have evefr heard a person say, or I guess write in this case. Bush knew there were no WMD's, he had the damn reports when he lied to the country about them.
And you're saying that the leader of one of the most powerful countries in the world is overpaid at 400k a year. What world are you living in?
Even piddly ass CEO's make far in excess of that.
I'm sorry, I just have call stupid on this one.
I don't think he is underpaid nor do I think anyone on wall street is either. I think it is stupid he wants to limit pay. I think there are a few more important things to worry about.
I also think it is stupid he thinks making over 250k a yr/ is rich
nice try honey! that was NOT me posting that boring crap. I didn't even read what you wrote cause it looks so boring!
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