Tuesday, June 2, 2009

Yu Yongding Wins The Internet, For Now

Global Crisis 'Inevitable' Unless U.S. Starts Saving, Yu Says

The good news is that the Chinese seem to have a pretty good handle on what ails the US: what increasingly appears to be an unserviceable debt.
It’s “very natural” for the world to be concerned about the U.S. government’s spending and planned record fiscal deficit, Yu said...
The other good news is that they aren't buying the Obama administration's rhetoric about reducing the deficit.

It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.

The bad news is that they're likely just setting up for a massive power grab.
Central bank Governor Zhou Xiaochuan has proposed a new global currency to reduce reliance on the dollar.
In any case, a skittish China is bad news for US central economic planners. In order to avoid an inflationary disaster should the economy begin to recover, the Fed will have to find someone willing to buy US debt other than itself. As things stand right now, that's a dicey proposition.

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