What I Learned Today - they're all gonna laugh at you, they're all gonna laugh at you

3rd June 2009

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they’re all gonna laugh at you, they’re all gonna laugh at you

You may have heard that Geithner, the US Secretary of Treasury, went to China this week to assuage the Chinese government’s concerns about US Treasury securities. See, China is one of the largest buyers of US Treasury securities, owning over trillions of dollars of government bonds. We rely on them to buy more bonds in order to strengthen our budget, but they’re concerned about the value of their investments and the strength of the declining US dollar. The dollar index, which measures the performance of the dollar against other currencies, saw the largest monthly decline in almost 25 years in May. And typically US government bonds are the safest investments and are considered “risk-free.”

So Mr. Geithner Goes to China (no doubt there will be a book written about it with this as its title) to convince them that investment in US securities is in their best interest, that we are turning around, that the Obama Administration’s intent is to “go back to living within our means; that we bring our fiscal deficits down to a sustainable level; that we unwind and reverse these exceptional measures we’ve taken in the financial sector.”

You may have heard that. But what you may not have heard was how he was laughed at. Apparently he did not just “elicit some laughter” as the NYTimes cursorily described, he was straight up laughed at. The American press did not necessarily pick up on the importance of this. Instead, they pegged the meetings as successful. But as The Telegraph describes, “US Treasury Secretary Tim Geithner was laughed at by an audience of Chinese students after insisting that China’s US assets are safe…. The comment provoked loud laughter from the audience…” We’re a laughingstock! A bit disconcerting.