I think the people of China said it best when they said
BWAH HA HA HA HA HA HAAA!!!!!!
http://www.france24.com/en/20090601-china-united-states-geithner-deficit-treasury-bonds-dollar
Hey, I hear there is going to be another season of Last Comic Standing. And I have a hunch they don't do background checks on your taxes!
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China is not going to be satisfied with any answer given by Tim "Whoops!" Geithner. It is only going to be appeased by a shrinking deficit. Since this is not showing signs of happening in the next five years, China is going short in the bonds it buys from the United States. By "short" I mean short maturity dates. Take a look at the price erosion of longer term US government bonds the last couple of months. They're falling, and yields are rising.
ReplyDeleteSo either everyone has all the damn bonds they need, and they don't want any more, or they are nervous about buying the longer term stuff because they're concerned about the Obama administration's wild borrowing and spending, and are as nervous as hell about a US dollar that looks like it might fall off a cliff in the next two years.
I used a bit of hyperbole there, but you get the general idea. So... which scenario is more likely?
If I were Tim Geithner, I'd be quitting my post fast and distancing myself from this mess and the mess to come.