Monday June 1, 2009 Post market close
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
And in a separate article....
The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession.
But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields.
Reuters.com, June 1, 2009
Skepticism, how about outright derision? We had posts on this May 30 and May 21 showing that in fact, yields have been advancing since the day after the FED started buying. The FED statement in the hyperlinked article, that purchases might have o incrrease is hilarious. It is rather like that famous Taco Bell commercial, the chihauhua is covered by Godzilla's shadow, and concludes, I think I need a bigger box! The FED does not have a big enough box of money to buy enough bonds to then sell enough bonds at the Treasury to raise $1+ trillion, and not face increasing rates! The proposed $300 M in purchases just does not offset $1+ trillion.
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