Is Tim Geithner's recent China bashing comment a goof?
I think so. Read this story from China:
"BEIJING (Nikkei)--Calls are growing in China for the government to reduce its holdings of U.S. Treasury securities, as some observers expect their prices to decline amid heavy issuance to fund U.S. economic stimulus plans.
Such sentiment -- in part motivated by indignation over recent American assertions that China is partially responsible for the global financial crisis-- threatens to cast a cloud over relations between Beijing and the new U.S.administration.
"China should sell some of its U.S. government bonds and increase its euro and yen assets," Yu Yongding, a former member of the People's Bank of China's policy board, wrote in a Chinese newspaper earlier this month. Yu warned that the supply of Treasuries may far exceed demand in the future.
Such remarks by Yu, who currently serves as director-general of the Chinese Academy of Social Sciences' Institute of World Economics and Politics, has sparked discussion within the government on how to manage its foreign reserves, according to a source familiar with the matter."
I'm not saying that "this is finally the last shoe to drop" . Just because a Chinese official calls for Beijing to sell their Treasuries, doesn't mean Beijing does. However, look at the damage done to the dollar, and Treasuries when we have a single individual within China calling for this!
A shot across the bow to Geithner, Schumer et al. China bashing is not only wrong in theory but has real world consequences for the USA. The US $ dropped nearly 1% over the weekend.