Finger Pointing at Davos

Where did you get $2 trillion in Chinese investment? I've heard $6 Trillion for a long time now. Chinese culture is very very big on a concept called, "saving face". If you insult the chinese, they simply go away and take their marbles elsewhere. If they stop buying our treasuries - holy smokes... you mention that the only customer for treasuries would be the Fed, which equals printing money, which equals hyperinflation, drop in dollar, more printing, crash in dollar. The chinese do not want to be paid back with worthless dollars, so there is a mexican stand-off. They need the dollar to hold value because of their standing investment. But it doesn't mean they have to place their future holdings with us. I think they were just looking for the reason to tell us to kiss off, and this Treasury Secretary may have just done that. Let me tell you, Canada's Prime Minister insulted the Chinese on his visit - saying that the first thing he wanted to address was China's civil rights record. What you want to go to China and tell them what for? When they are your biggest customer? What an idiot. That turned into a huge drop in China's purchases of Natural Gas from Canada. What a stupid thing for Harper to do - be a guest in a country and insult the host. He paid a big price in lost exports, and I fear that Geithner did a big boo boo. He's not as awful as Paulson, but I am not that relieved that Geithner is at the helm. Ow my tummy is making weird noises. Gary Fong

This financial crisis is just the beginning of the fall of American Empire. Not only the average US citizens are living beyond their means. The US government and every state governments are spending beyond their means too, including the huge military spending and war budgets for Iraq. As worth is reduced or wasted on tanks, so the end of empire. The invasion of Iraq was a mistake. Japan is just a blind puppet of US so it follows the wrong policies of US around the globe. The Japanese Navy on the Indian Ocean is a way for Japan to practice their navy so they can go back to that pre-WW II militant state.

Tweedledee and Tweedledum – Russia and China – IT WAS NOT US YOUR HONOR Tweedledee and Tweedledum have obviously forgotten their Nations integral part in the world economic collapse. Russian and Chinese combined National greed and self-interest have had at least equal part if not more in contributing to the current economic mess. Dear Chinese Premier Wen Jiabao China has manipulated the Chinese currency in a successful attempt to move the worlds manufacturing base from the US and other industrialised nations, as well their wealth into China, and thereby reducing the US and other Nations to their current decrepit industrial States. What has happened is China after manipulating currencies to derive advantage over other Nations has positioned itself in such a way that it can afford to suddenly reduce production. The rest of the world is forced into recession. The rapid decrease in production forces the price of raw materials and other goods into a nose dive and the distressed companies are now open to takeover or at least influence via significant shareholdings and/or financial support. Who needs tanks. Did Putin blink when the price of oil more than trebled putting sever economic pressure on the rest of the world? The reason for Putin going into Georgia was simply to control energy supplies to Europe. As well the disruption of energy supplies to Europe does not appear to have helped the world economic circumstance? Russian financial prudence – get real. Tweedledee and Tweedledum try and change your Nations approach from self-interest to enabling the independence others first, history will reflect much more kindly on your efforts.

The financial collapse, rising unemployment, rising inflation, rising energy costs and the falling Dollar are ALL SYMPTOMS of failed US policy towards China. By manipulating the US dollar, China has artificially suppressed their currency making it cheaper to buy their goods and more difficult (or expensive) to export USA products. This manipulation resulted in significant cash outflows to China, who in turn did not buy US goods, but instead acquired significant energy resources in the world thereby driving up global energy costs and sped up the domino effect that led to the financial collapse. In the process they have symphoned off $1 Trillion in 5 years or close to $7 trillion when taking into account that each dollar turns over 7 times per year. With an M&A value at 1 times sales, it means that China has syphoned off in excess $7 trillion of US capital. If China had been a respecting trading partner, then they would have either bought equal amounts of goods or allowed their currency to float to self correct gradually. We need actual against the Chinese manipulation and if the Chinese do not allow the Yuan to float freely then the US MUST IMPOSED IMPORT TARIFFS or QUOTAS.

Every empire in history collapsed because its own mistakes or mismanagements, not due to external force. The Empire of US will collapse because Americans are living beyond their means, not because of anything China has done. As a Chinese, I am proud that we now have the money to update our military hardware. We didn’t have the money because of our own mistakes. I hope this trend will continue until the point China becomes the richest country in the world and has the most powerful military in the world. By many calculations, China will overtake Japan as the second largest economy in 3 to 5 years. China’s growth rate is 8 to 10% while Japan’s is -2 to 0% and US is -2 to 3%. In about 20 years, China will overtake US too. China is still poor by per capital count. China shall be able to treat its people better once my dream comes true. China is starting to provide universal medical care to its population now, which is unimaginable just 10 years ago. China already has a social security system in place for 10 years, which is well funded. In comparison, US has not be able to provide universal medical care to its population and 70 million Americans are without medical insurance. US social security is not adequately funded.

I find the fingerpointing interesting. I wonder if some execs and CEOs were disapppointed in Pres. Obama for not having a repersentive in Davos to handle a lot of thier economic concerns and questions. I got through reading an interesting article in Vanity Fair about President Putin. Learn lots of things but an article doesn't cover enough about someone like Putin like a through biographer would.

Wow, thanks for keeping us undated. However, America needs to work on their values. He are morally bankrupt. Yes, morally bankrupt. The cheater is rewarded and the hard working father and mother are taxed to death. Worry about China? When did China make the US the greatest county on earth? We need to return to the values that made us the greatest nation on earth. China treats its people like crap and it cares for us even less. Worry about China!!!!! Worry about returning to honesty, enforcement of one's promises.

Of course, if China stops buying our soon-to-be-junk debt, and the Fed *does* become the buyer of last resort (of Treasury notes), we would have... the U.S. Government buying its own debt??? With more debt??? Is there -any- value created anywhere in there? Are we trading shorter-term debt for longer-term debt? Oh well; we put a guy who messed up, or cheated, on his taxes in charge of the Treasury and IRS! Then he shoots his mouth off; where's the new era of diplomacy and smooth talk??? Can't wait to see what the still-wet-behind-the-ears President's other cabinet geniuses are going to mess up. (Read Neal Stephenson's "Snow Crash" for one vision of what America could look like in not too much more time.)

Ms. Glick Thanks you for keeping us up to date. Yours is the only financial blog I read. Thanks for giving up your sleep in order to keep me "in the know"

The author writes in her last paragraph above: "Also of note, the tension between the U.S. and China is of vital importance to us. The interconnected relationship of the U.S. and China is crucial to financing our debt. China now has $2 trillion in dollar- denominated foreign exchange reserves. Last September they surpassed Japan as the biggest holder of Treasurys....We have to be very, very careful. Without them [China], the Fed would become the buyer of last resort." The difference is, of course, that Japan is a fellow democracy and a key military ally who continues to function as part of the international anti-terrorist coalition, providing underway replenishment (UNREP) support to Combined Joint Task Force 150 in the Indian Ocean. Japan provides fuel oil and fresh water - at Japanese taxpayer expense - to warships of the US Navy as well as several allied navies. For all the hype about the Chinese economy, Japan's GDP is still considerably larger than China's in dollar terms. The People's Republic of China has made no secret of its military ambitions in the Asia-Pacific region. It's most recent annual defense report emphasizes the creation of power-projection capabilities, and open-source reports indicate China's desire to construct one or more aircraft carriers. Also note that China's economic expansion has supported a military budget that has increased by double-digit percentages every year for nearly two decades. According to the "Annual Report to Congress: Military Power of the People's Republic of China 2008," published by the US Department of Defense, China's publicly-stated military budget may account for as little as one-third of their real military expenditures. China's purchase of US Treasurys, as well as our exploding national debt and resultant need to seek foreign money to finance our monumental deficits, mean that Beijing effectively holds the both the US economy and US national security policy hostage. American media coverage focuses almost exclusively on China's economic growth rates and the perceived opportunities therein, with almost no thought to the long-range security implications for our country. I am saddened to admit that Premier Wen was right when he spoke of America's "blind pursuit of profit." "More to come," indeed.

"Without them, the Fed would become the buyer of last resort." WHERE HAVE YOU BEEN THE LAST FEW MONTHS?