Special report: China flexed its muscles using U.S. Treasuries

Special report: China flexed its muscles using U.S. Treasuries

"As the U.S. Federal Reserve grappled with the aftershocks of financial crisis, the Chinese, like many others, suffered huge losses from their investments in American financial firms -- from Lehman Brothers to the Primary Reserve Fund, the money market fund that broke the buck.

The cables, obtained by WikiLeaks, show that escalating Chinese pressure prompted a procession of soothing visits from the U.S.Treasury Department. In one striking instance, a top Chinese money manager directly asked U.S. Treasury Secretary Timothy Geithner for a favor."

China is flexing it's muscles and asking for favors? What (for us economically simple minded) does this mean? Is the U.S. being held economic hostage by the Chinese?

Alaskan Girl wrote:China is flexing it's muscles and asking for favors? What (for us economically simple minded) does this mean? Is the U.S. being held economic hostage by the Chinese?

These are Wikileaks cables between the American embassy in China and Washington. They suggest that China was pissed about the US handling of the financial crisis and were making demands to protect their investments. China has a huge multi trillion dollar investment in American dollars, and as the dollar slides their investments shrink - so they are reacting as very powerful investors.

The bottom line is that the Chinese appear to have more influence over American policy than most people thought.

It seems they are also less interested in free markets than they like to appear. They expect special treatment, just like all bankers.

Joe Bese wrote:It seems they are also less interested in free markets than they like to appear. They expect special treatment, just like all bankers.

Free markets? What the hell are those?

Aetius Romulous wrote:

Joe Bese wrote:It seems they are also less interested in free markets than they like to appear. They expect special treatment, just like all bankers.

Free markets? What the hell are those?

LOL. Mythical thing, kind of like planet X.