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IPFS News Link • Economy - Economics USA

Geithner Goes To China: Will He Soothe Or Spark?

Timothy Geithner's first trip to China as treasury secretary comes at a vulnerable time for the Obama administration. Mired in a brutal recession, the United States needs Beijing to buy more American goods, allow its currency rise and make other moves to narrow an enormous trade gap. The U.S. also needs China's help to confront any military threat from North Korea. Yet Washington's leverage has waned just as China's power over the U.S. has grown. China is now America's biggest creditor. As of March, it held $768 billion of Treasury securities — about 10 percent of publicly traded debt. The U.S. needs China's money to finance U.S. budget deficits, which are soaring as Washington tries to end the recession and bolster the banking system. The administration estimates the budget deficit will hit $1.84 trillion this year. That's four times last year's deficit.

1 Comments in Response to

Comment by Jet Lacey
Entered on:
I urge everyone who is interested in this subject to read Bob Chapman's latest update in The International Forecaster (05/30/2009). As you read the article, you begin to realize the precarious position China is actually in.

In the article, Bob details just how screwed the Chinese and the Russians are for having so many US Dollars in reserve coupled with how deficient their gold reserves are. Their monetary systems are, like ours, 'castles built on quicksand' and, like ours, doomed to failure.

They are the laughing stock of the world right now and they know it.

The link to the article is below: