Geithner was just quoted by Reuters as saying that China’s currency policy does not pose systemic risks but it does pose problems.
Did the Treasury Secretary of the United States, less than two years after the near-collapse of the global financial system, really say that under oath before Congress?
I’ve had lots of fun at the expense of Timmy Taxes over the years but until now I’ve always felt he was a fundamentally solid, mainstream thinker. Now, I’m quite sure he’s an idiot.
The fundamental reason for the credit bubble globally can be laid at China’s doorstep. They kept their currency artificially weak, accumulated unimaginably large reserves and unleashed those reserves in capital markets around the world in search of returns. In the process, formerly risky assets became mainstream as the markets searched for yields.
Did regulators and central banks make mistakes? Sure. But you can’t hold back a tsunami with a kitchen sponge.
Truly an unbelievable comment from “an old China hand”…
