Fed Chair Bernanke in China – What’s up?

Recently I suggested that governmental data was at best incorrect. The need to filter the noise and the spin is important to understand where we are and what we need to be doing. Testifying before the Senate Banking Committee that China’s immense holdings of US assets and debt did not pose a threat to the US economy, Federal Reserve Chairman, Ben Bernanke, said, "I don't think that the Chinese ownership of U.S. assets is so large as to put our country at risk economically; it would be very much against their own interest to do so"

Mysteriously this week, Bernanke pulled up stakes and flew to China at the request of the Treasury Secretary Henry Paulson. Instead of spending Thanksgiving with his family the Treasury Secretary asked and Fed Chairman agreed to meet with the Chinese Government in China.

Could it be that the administration is taking seriously China’s recent threats to tank the US economy by selling both dollars and Treasury debt?

While the headlines talk about Bernanke encouraging the Chinese government to fight intellectual property piracy and to allow the currency to fluctuate more freely, only a small, insignificant, one line mention was given to the primary reason for this desperate move. Bernanke is expected to make the point that the United States' reliance on China as a buyer of its debt is not sustainable.

So Bernanke is in China to negotiate with China concerning the sale of US assets and debt. My question is what can he offer? While Mr. Bernanke may believe he understands what is “China’s best interest”, the only people who have any say in the matter are the Chinese. The truth is, we are in the crapper. Not on it, we are in it. The only thing Mr. Bernanke can negotiate with is Joe Worker’s wages. In other words he will have to facilitate China’s expansion into US markets to keep them from tanking our economy.

I can hear you now, “this guy is crazy!” US #1, we are the strongest economy in the world! Now that you have exploded let’s get rid of the spin. Treasury Secretary Paulson is meeting with his old financial company buddies to prepare them in case there should be some difficulties.


"You always want to take market reaction into account when government makes a determination," Tony Snow told reporters in Chicago when asked whether top officials were discussing the possibility privately with investors.

"Prudent governments will always try and assess markets and try and prepare markets so markets aren't disrupted," he said.

So Paulson is trying to negotiate buyers for the upcoming sales of Treasury debt. What will he have to give up in exchange? Perhaps a guarantee that the Administration will Veto any legislation to extend usury laws to financial institutions?

The worldwide currency traders are taking China seriously. The dollars has lost 2.5% in two days.

Gutless, corrupt politicians, it is time to come clean with the US citizens and to take on thirty years of disastrous Reaganomics. Free Trade only works in a Free World, Free of Corruption. This is not the world we live in today. To fix our country and return the United States to its previous glory, truly the envy of the world, and not just in the minds of some financial analysts, we need to admit our problems, cut our losses and initiate the long and hard path to prosperity.

Tags: Politics Inept Government Corrupt Politicians Government Data War on the Middle Class Federal Reserve US Treasury China Tanks US Chinese Threat