Obama Reassures China in Words, Not Actions
The Obama administration took steps over the weekend to reassure the Chinese government that its investment in US treasuries was sound. The Chinese primier Wen Jiabao had shared his trepidation over the potential decline in the US dollar. A former Chinese central bank advisor complained the administration’s reckless policies are eroding China’s investment in US treasuries.
We really have to stop and note the irony here. We have a communist country chiding what is supposedly the world’s great bastion of capitalism on government spending. Even more indicative of the situation is the clear power the Chinese government over this country, as the administration rushed to reassure the Chinese that all is well. I doubt that China will dump its US treasuries en masse, but I think that this does signal that the credit gravy train for the US government may be coming to an end, let’s hope so anyway. Admittedly, all signs up until now have pointed to the contrary as China has continued to gobble up treasuries in recent months. There perhaps is some false hope that China’s reluctance to purchase US debt will keep government spending in check. Ok, fine, keyword false.
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