Tuesday, 17 March 2009

Sino/US posturing on credits - not a zero sum game

David Merkel is a serial blogger and his comments are often found at SeekingAlpha. Usually I find myself in broad agreement with his views but the following comment I found to be not only mistaken but somewhat in bad taste

Why are we trying to reassure China regarding their purchases of US Government debt? As a government, they made efforts to push their exports on the US, and had to take back US debt, because it seemed to be the best store of value, or at least, the most liquid. Personally, I do not see any reason to kowtow. They are not our problem; we are their problem. (my emphasis) Let China figure out that they have been playing in a rigged casino. They still don’t have many places to park spare funds.

Just to spell it out he is conveniently ducking the issue of whether the Chinese have grounds to be concerned about the creditworthiness of US Treasuries and focuses his attention on their wisdom in accumulating as many US credits as they have done.
To say in a cavalier fashion that we (i.e. the US) are their (i.e. Chinese) problem sounds pretty macho, but this is not a zero sum game. And the real we (i.e. the global financial system) have a stake in this game as well.

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