Safe Investing: Apparently the Chinese don't think so
We continue our remarks on Geithner's visit to China. Picture this scene:
A senior Chinese official speaks at one of America's top universities. Take your pick. Harvard? Yale? It really doesn't matter.
He assures an audience of students that China will promise to continue to buy treasury securities no matter what happens to the dollar. They will continue to buy even if the value of those securities drops dramatically. China is willing to lose money, even tens of billions of dollars, just so that the U.S. will not suffer the embarassment and monetary loss of China selling treasuries.
What do you think the audience reaction would be? I think mostly silence. Some students might wince. They would be thinking, "Why would the Chinese do that?" And they would be right to wonder.
But they probably wouldn't laugh out loud at the absurdity of such an assurance. Either through politeness, or, because they really don't understand the problem, they wouldn't laugh.
So what happened at Beijing University when Geithner addressed their students? He assured students that Chinese holdings of treasuries were safe. They laughed out loud. Not winced or snickered. They laughed so that you could hear the laughter. They thought Geithner's comments were comical, silly, probably absurd. Why would Geithner say something so silly?
So this is what it's come to. The students at one of China's top universities laughed at a senior American official. Right in his face.
Later in the day, China's Vice Premier Wang Qishan told Geithner, ""We must through our dialogue send a clear signal that China and the U.S. are engaged in practical cooperation to address the crisis." I suppose he was smoothing things over a bit.
But the young folks - their smartest young folks - weren't fooled. They see the writing on the wall. Maybe they were laughing at their own officials as well for listening to Geithner. Who knows?
Do you think those students are questioning whether their esteemed leaders are pursuing a course of safe investing with their money?
A senior Chinese official speaks at one of America's top universities. Take your pick. Harvard? Yale? It really doesn't matter.
He assures an audience of students that China will promise to continue to buy treasury securities no matter what happens to the dollar. They will continue to buy even if the value of those securities drops dramatically. China is willing to lose money, even tens of billions of dollars, just so that the U.S. will not suffer the embarassment and monetary loss of China selling treasuries.
What do you think the audience reaction would be? I think mostly silence. Some students might wince. They would be thinking, "Why would the Chinese do that?" And they would be right to wonder.
But they probably wouldn't laugh out loud at the absurdity of such an assurance. Either through politeness, or, because they really don't understand the problem, they wouldn't laugh.
So what happened at Beijing University when Geithner addressed their students? He assured students that Chinese holdings of treasuries were safe. They laughed out loud. Not winced or snickered. They laughed so that you could hear the laughter. They thought Geithner's comments were comical, silly, probably absurd. Why would Geithner say something so silly?
So this is what it's come to. The students at one of China's top universities laughed at a senior American official. Right in his face.
Later in the day, China's Vice Premier Wang Qishan told Geithner, ""We must through our dialogue send a clear signal that China and the U.S. are engaged in practical cooperation to address the crisis." I suppose he was smoothing things over a bit.
But the young folks - their smartest young folks - weren't fooled. They see the writing on the wall. Maybe they were laughing at their own officials as well for listening to Geithner. Who knows?
Do you think those students are questioning whether their esteemed leaders are pursuing a course of safe investing with their money?
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