Thursday, March 12, 2009

The Debts of the Lenders: US Continues to Anger Its Largest Creditor (e.g. Treasury Buyer)

How long before the idiots in Washington DC and the Pentagon realize that the world has changed? That the USA is no longer the pre-eminent superpower in the world?

BEFORE the start of a busy Treasury auction schedule, US naval ships engaged in provocative actions off the Chinese coast by spying on a naval base. The issue of whether the US was legally "correct" in staying w/in international waters is moot. As the largest foreign creditor of the US, China has the financial leverage to make its point clear in no uncertain terms.

Do you recall a similar incident earlier this year when Treasury Secretary Geithner launched a bombastic attack against China accusing it of currency manipulation?

Well, I said then that China responded w/actions - not words.

Treasuries sold off hard immediately after the harsh exchange and Geithner was humiliated into a retraction. Moreover, Obama was forced to send a diplomatic "damage control" mission to Beijing to apologize and re-assure China that treasuries were still a sound investment.

China is THIS close to sending another financial message to the US. Again.

From the AP newswire:

Rising navy, assertiveness behind US-China flap

By CHRISTOPHER BODEEN – 41 minutes ago

BEIJING (AP) — China's Defense Ministry has demanded that the U.S. Navy end surveillance missions off the country's southern coast following a weekend confrontation between an American vessel and Chinese ships.

In its first public comment on the Sunday episode, the ministry repeated earlier statements from the Foreign Ministry that the unarmed U.S. ship was operating illegally inside China's exclusive economic zone when it was challenged by three Chinese government ships and two Chinese-flagged trawlers.

"The Chinese side's carrying out of routine enforcement and safeguarding measures within its exclusive economic zone was entirely appropriate and legal," ministry spokesman Huang Xueping said in a statement faxed overnight to reporters.

"We demand the United States respect our legal interests and security concerns, and take effective measures to prevent a recurrence of such incidents," Huang said.

Despite the sharp remarks, Chinese Foreign Minister Yang Jiechi and U.S. Secretary of State Hillary Rodham Clinton met in a private meeting Wednesday in Washington D.C. to say the countries agreed on the need to reduce tensions and avoid a repeat of the confrontation.

But neither side yielded in their conflicting versions of events, even as they prepare for a much-anticipated first meeting between Hu and President Barack Obama at next month's G20 summit in London.


In Debt We Trust said...


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