Socio-Economics History Blog

Socio-Economics & History Commentary

Geithner: ‘Chinese Dollar Assets Are Very Safe!’ His Answer Drew Loud Laughter From Chinese Student Audience!

  • Yeah right! Don’t worry about your US$2T in USD denominated assets! They are perfectly safe. They will definitely be worth something in the future. You can use it as toilet paper! I am not sure what Geithner is smoking. Reuters reports :
      
    U.S. Treasury Secretary
    Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.
     
    A major goal of Geithner’s maiden visit to China as Treasury chief is to allay concerns that Washington’s bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.
     
    China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China’s total U.S. dollar-denominated investments could be twice as high.
     
    “Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s. His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
     
    But later in the day, Chinese Vice Premier Wang Qishan said it was important for the two nations to show the world they are working together through their joint economic dialogue.
     
    “We must through our dialogue send a clear signal that China and the U.S. are engaged in practical cooperation to address the crisis,” Wang told Geithner, according to the Chinese Foreign Ministry’s website (
    www.mfa.gov.cn).
     
    “This is important for boosting confidence and encouraging global financial stability and economic revival,” said Wang. In his speech, Geithner renewed pledges that the Obama administration would cut its huge fiscal deficits and promised “very disciplined” future spending, possibly including reintroduction of pay-as-you-go budget rules instead of nonstop borrowing.
     
    “We have the deepest and most liquid markets for risk-free assets in the world. We’re committed to bring our fiscal deficits down over time to a sustainable level.
     
    “We believe in a strong dollar … and we’re going to make sure that we repair and reform the financial system so that we sustain confidence,” he said. Geithner also offered strong backing for a bigger Chinese role in international policymaking. “China is already too important to the global economy not to have a full seat at the international table,” he said.

end

June 2, 2009 - Posted by | Economics | , , , , ,

Sorry, the comment form is closed at this time.

%d bloggers like this: