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Obama's Stimulus Plan Stopped by Great Wall of China?

hypocritexposer

Well-known member
Tuesday, February 10, 2009
The Debts of the Lenders: Obama's Stimulus Plan Stopped by Great Wall of China
Chinese officials are increasingly assertive of their views on American fiscal "stimulus" (aka "porkulus legislation").

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

“The government will be a net buyer of Treasuries in the short term because there’s no sign they have changed their strategy,” said Zhang Ming, secretary general of international finance research center at the Chinese Academy of Social Sciences in Beijing. “But personally, I don’t think we should increase holdings because the medium- and long-term risks are quite high.”

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump and the U.S. government debt will lose its allure for being a safe haven for international investors.”

http://www.bloomberg.com/apps/
news?pid=20601080&sid=a_dsDz145J_A&refer=asia
 

Sandhusker

Well-known member
hypocritexposer said:
Tuesday, February 10, 2009
The Debts of the Lenders: Obama's Stimulus Plan Stopped by Great Wall of China
Chinese officials are increasingly assertive of their views on American fiscal "stimulus" (aka "porkulus legislation").

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

“The government will be a net buyer of Treasuries in the short term because there’s no sign they have changed their strategy,” said Zhang Ming, secretary general of international finance research center at the Chinese Academy of Social Sciences in Beijing. “But personally, I don’t think we should increase holdings because the medium- and long-term risks are quite high.”

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump and the U.S. government debt will lose its allure for being a safe haven for international investors.”

http://www.bloomberg.com/apps/
news?pid=20601080&sid=a_dsDz145J_A&refer=asia

This is your banker talking, Obamazombies. Do you understand what he is saying?
 

Tex

Well-known member
Sandhusker said:
hypocritexposer said:
Tuesday, February 10, 2009
The Debts of the Lenders: Obama's Stimulus Plan Stopped by Great Wall of China
Chinese officials are increasingly assertive of their views on American fiscal "stimulus" (aka "porkulus legislation").

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

“The government will be a net buyer of Treasuries in the short term because there’s no sign they have changed their strategy,” said Zhang Ming, secretary general of international finance research center at the Chinese Academy of Social Sciences in Beijing. “But personally, I don’t think we should increase holdings because the medium- and long-term risks are quite high.”

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump and the U.S. government debt will lose its allure for being a safe haven for international investors.”

http://www.bloomberg.com/apps/
news?pid=20601080&sid=a_dsDz145J_A&refer=asia

This is your banker talking, Obamazombies. Do you understand what he is saying?

Personally I think it is immoral for China to subsidize U.S. politician's zeal for putting everything on the credit card.

We have a low savings rate and maybe higher interest rates is the answer to solving that problem.

Monetizing the debt (which will be done if we can't borrow for it) will increase interest rates, inflation rates, and decrease the value of foreign holdings of U.S. debt and quite possibly solve the trade imbalance. China needs to pay for subsidizing their currency. We will end up paying for it in the unrealized inflation that trade deficits bring and the inflation in prices of foreign goods. Looks like the free ride may be over.

Much of this may be out of the control of politicians as they have already set the stage for the play and all the tickets have been sold. Devaluation of the dollar is on the way unless the economy picks up, or interest rates rise. The only thing that can really change it, which seems to be happening, is for other governments to devalue their currencies at the same rate.
 

Tam

Well-known member
Has anyone seen this

China Jittery About Obama Amid Signs of Harder Line
By MARK LANDLER
Published: January 24, 2009
WASHINGTON — Whether it was a shot across the bow or a simple restatement of his boss’s views, Timothy F. Geithner’s assertion that China “manipulates” its currency has complicated a crucial front in President Obama’s efforts to improve America’s relations with the world.

China experts here said there were several other signs that the Obama administration could take a harder line toward Beijing, including Mr. Obama’s emphasis on climate change and the environment in trade negotiations and Secretary of State Hillary Rodham Clinton’s focus on human rights.

The Chinese Ministry of Commerce responded tartly to the charge by Mr. Geithner, Mr. Obama’s nominee for Treasury secretary. Su Ning, vice governor of the nation’s central bank, said the remarks could “sidetrack” efforts to find the real cause and solution to the financial crisis and could revive trade protectionism. A statement from the Ministry of Commerce denied that China had ever used so-called manipulation to gain a foreign trade advantage.

China starts off on weaker footing with Mr. Obama than it did with his predecessor, George W. Bush. Mr. Bush and his last Treasury secretary, Henry M. Paulson Jr., cultivated Chinese leaders and refused to call Beijing a manipulator. Mr. Obama has little personal experience of China, and lacks senior advisers with a deep interest in or knowledge of the country. With the American economy in a deep slump, and China trying to ramp up its exports to cushion a sharp slowdown there, experts worry that trade relations between the countries could deteriorate.

If the United States repairs its image in many parts of the world, that could make it harder for the Chinese to present themselves as an alternative to American influence in Asia, Africa, and elsewhere.

“The Chinese are probably one of the few people in the world who were sorry to see President Bush go, and are nervous about his successor,” said Kenneth G. Lieberthal, a visiting fellow at the Brookings Institution who worked on China policy for the Clinton administration.

“They saw the Inaugural Address as having some uncomfortable elements for them,” Mr. Lieberthal said. “They are uneasy about Hillary Clinton. She has, in their assessment, not been a friend of China.”

The Chinese news media played down the significance of Mr. Geithner’s remarks, which were made in writing to the Senate Finance Committee as part of the confirmation process.

Rather than dwell on or analyze the reference to China’s currency, the Chinese official newspaper, The People’s Daily, quoted Mr. Geithner as saying that the currency manipulation issue would take a back seat to working with China to alleviate the global financial crisis. The headline said, “U.S. Treasury secretary-designate vows to deepen U.S.-China economic ties.”

American experts agree that the United States will have to work closely with China to engineer a global recovery, and the two countries have each embarked on costly programs to stimulate their economies. The Obama administration will also depend on China to continue buying Treasury bills and other government debt to finance its $825 billion recovery package.

Yet several things could conspire to spoil that cooperation. The Treasury must decide later in the spring whether to label China a currency manipulator, under a law that requires the administration to report to Congress twice a year on the exchange rate practices of trading partners.

In his written response, Mr. Geithner appeared to leave the administration plenty of wiggle room. “The question is how and when to broach the subject in order to do more good than harm,” he said.

But as a candidate, Mr. Obama took a tough line on China’s practices, saying that Beijing pegged its currency at an artificially low rate and pledging to use diplomatic means to force a change.

“This is not good for American firms and workers, not good for the world, and ultimately likely to produce inflation problems in China itself,” Mr. Obama said in a campaign essay for the American Chamber of Commerce in China.

Advocates for closer ties said they worried that unless the administration developed an overall framework for the relationship, individual events like the Treasury report could dictate the atmosphere.

It is not clear that such a framework exists. Mrs. Clinton was careful to steer clear of currency issues in her testimony to the Senate. In that testimony, she demurred on the question of whether the Obama administration would continue the “strategic economic dialogue,” a semiannual meeting on economic issues between the two countries that was led by Mr. Paulson.

Mrs. Clinton does not have the same extensive history with China that she has had with other countries. She is best known there for a speech she gave in 1995 in Beijing about women’s rights, and some China experts said they worried that her positions on trade and human rights could be a problem. Mr. Obama’s focus on energy and climate change, experts said, could cut both ways. If China and the United States could find ways to cooperate on stemming the growth of greenhouse gases, it could become the cornerstone of the relationship. If not, it could be dangerously disruptive.

Nicholas R. Lardy, an expert on the Chinese economy at the Peterson Institute of International Economics in Washington, said the financial crisis had upended many of the assumptions about the relationship.

China’s currency, he noted, has increased in value in recent months because it is pegged to the dollar, which has risen as investors fled to safe investments. China’s trade surplus with the United States has stopped growing, as American consumers stop buying so many Chinese imports.

C. Fred Bergsten, the Peterson institute’s director, said Mr. Geithner had another target in mind with his remark.

“It was a shot across the bow of Congress,” he said. “The administration is saying, ‘We will be tougher on the Chinese on trade, so you don’t need to pass protectionist legislation.’ “

Edward Wong contributed reporting from Beijing and David Barboza from Shanghai.

Obama is going to have to work with China to finance his pork filled bill so he better play nice and shut Geithner up and rein in Hillary.
 
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