Pissing off the Chinese

February 15, 2009 – 3:46 pm

by Rolfe Winkler, CFA

Reuters doctored this original story to remove the bolded section below.  (MLI)

Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York that China would continue to buy Treasuries in spite of its misgivings about US finances.

Mr Luo, speaking at the Global Association of Risk Management’s 10th Annual Risk Management Convention, said: “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”

Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”

You can bet jingoistic politicians will find a way to blame the Chinese for our current mess, nevermind that they’ve financed a significant chunk of America’s debt-fueled lifestyle.  But the bond market will soon be less receptive to American paper and—because Americans certainly won’t admit this is their own fault—politicians will have to find someone else to scapegoat.

  1. 5 Responses to “Pissing off the Chinese”

  2. Scapegoat? You need a scapegoat? There’s always a handy scapegoat for international financial problem: the Jews. What would a good financial scandals be without Jews? You know it’s coming, don’t you?

    By Nooyawka on Feb 15, 2009

  3. Just found this site… thank you!

    After I stopped listening to the mind numbing drones on MSM like CNN, MSNBC , NBC.. I started searching online for info.. and stumbled across your site.. its great! thank you!

    By anon on Feb 15, 2009

  4. So we must ask ourselves the big question – where will the alternative be for those who quite rightly doubt the future dollar? Canada has had its share of troubles, but their banks look solid compared to ours. Brazil will be well placed in oil in years to come. Both Brazil and China have many many poor who could stand to move up to such basics as flush toilets.

    I noticed that at my bank, the 12 month CD is now paying less than the regular savings account…that says deflation in the short term to me, but those trillions piling up are going to have an effect.

    The NY Times always does a good job summarizing situations graphically. Here’s an example that tallies the damage so far.

    By CB on Feb 15, 2009

  5. Bloomberg updated the story with a clarification from Luo, that the Chinese will continue to buy T bonds but will also invest in gold and other sovereign debt.

    As for politicians demonstrating their outrage about those awful Chinese, look back a year and a half ago to when there was talk of poison toys and melamine. There was a debate in the Senate in which much grandstanding was done, notably by Chris Dodd, calling for punishing China and so forth.

    It’s lunacy, as PCR often makes abundantly clear. We shouldn’t keep poking our creditors with a stick, and our politicians had better wake up to this fact.

    By Dan on Feb 16, 2009

  6. The saving rate in US is rising, and you’ll find most of banks buy up US treasuries using the money in their saving accounts.

    By Hirohito on Feb 16, 2009

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