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China to U.S.: Maintain your credit
Chinese Premier Wen Jiabao
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TEXT OF STORY
Steve Chiotakis: Well, stimulus plan talks in Japan and China are helping boost stocks. This weekend, the talk will likely prevail as world leaders meet ahead of next month's G20 summit. They're looking to spark recovery in their collective economies, and the Chinese prime minister also has a message for the United States. From Shanghai, here's Marketplace's Scott Tong.
Scott Tong: Prime Minister Wen Jiabao told a press conference that Beijing has "adequate ammunition" to roll out new stimulus any time. Chinese officials faked out the markets last week, suggesting that a new package was coming, and then it never happened. Economists say the point today is Beijing is ready and able to supersize its half trillion dollar stimulus.
Still, Prime Minister Wen sounded less assuring on another topic: loans to the United States. He said he was "concerned about the safety of our assets." As in $700 billion in Treasury bonds.
Economist Wu Xinbo is with Fudan University:
Wu Xinbo: We are not expecting the U.S. economic recovery in the next several months. But we hope the Obama administration will address our concern in a direct way.
The prime minister asked the U.S. to "maintain its good credit." By one measure, U.S. treasuries have fallen 2.7 percent this year. But still, they're deemed one of the safest investments on Earth.
In Shanghai, I'm Scott Tong for Marketplace.
China should be worried about their dangerous over investment in US Treasury obligations. Washington’s long-term choice is either repudiation or monetization. For monetization to be effective, the depreciation in the dollar would have to be substantial and this in turn would dramatically raise prices of imports for American consumers which would mean a tremendous drop in foreign imports. Debt monetization would cause more disruption to exporting nations than selective repudiation of Treasury debt.
Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasury bonds, the dollar, gold and the stock market.
The Campaign to Cancel the Washington National Debt By 12/22/2013 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts
Thanks, Ron Holland
