For my friends who don’t believe that the US economic status is officially going down the drain, this article sheds some light on what China is doing with it’s reserves – not lending them to the US any more…
One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America’s debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. “We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets,” he said.
The US policy makers and banks will continue to tell us that nothing is wrong with printing a lot of money to try to make up for the trillions that have disappeared into thin air in the past 6 months. I’d suggest that things may just be a little more fragile than they make them out to be. Who knows what the impact on the Canadian economy will be, but it can’t be good.
“China cannot succeed if the U.S. does not succeed,” he said after a speech sponsored by the Asia Society, noting that while China owns a lot of U.S. Treasurys its economy is still dependent on U.S. consumer spending.
You can read many different interpretations and meanings into the above statement, does it represent arrogance, naivety, fear, wishful thinking, or an unwavering belief that the US is the most important player in the world’s economy – the lynch pin?
I don’t claim to have the answers to these financial troubles, and anyone who claims to should probably be taken with a grain of salt, but if you are sitting around waiting for things to get better – the picture from outside the US doesn’t look so ready for “recovery” – whatever that means.
I’ve stated before the links between the issues of peak oil, climate change and the economy. The lack of international trust in the US economy should be regarded with caution for those who believe that America has the means to pull itself out of the combined mess that results from Peak Oil and Climate Change with a seriously weak economy.