Thursday, May 28, 2009

Geithner to China

Glenn Reynolds notes a NYT article about Treasury Secretary Tim Geithner going to China. The NYT editorializes:
Perhaps the chief issue facing global markets is the extent to which China will continue investing heavily in Treasury bills. If China believes the dollar is going to decline in the future, given the ballooning United States debt, it could reduce its purchases.
Or they may want to make clear that they view their purchases of US debt as something entirely different. Perhaps they want to tell Mr. Geithner that they are purchasing future foreign policy concessions. Maybe they'll spellout what those concessions will be. What is US recognition of China's claims to Taiwan and Tibet worth? How much debt forgiveness do they have to offer for a carrier battle group?

Once those concessions are lined up, then they'll stop buying our debt.


BobW said...

An old saying:

"If you owe the bank a dollar, the bank owns you. If you owe the bank a million dollars, you own the bank."

dsm said...

If we make the treasuries that China owns worthless, then what are we going to do to stop them from annexing Tibet and Taiwan? Goto war and further into debt? Obviously, we will menace them with "moral outrage." But that will not work. We'll need to take debt off our books and recognizing China's territorial claims is an easy rationalization for a politician.