Thursday, Mar 05, 2009
DUCKS? Are the Chinese still buying our bonds?”
Bruce Krasting Economics: Geithner ducks a big question
Geithner ducks a big question
Mr. Geithner was on the hot seat again today. He did his best to sell a bad budget. The closing tape speaks for itself.
One of the Congressmen asked a hard question. “Mr. Geithner can we sell the bonds necessary to fund this deficit? Are the Chinese still buying our bonds?”
Mr. Geithner responded with a full three minutes of non-answers to those questions. At the end of three minutes the Congressman repeated his questions.
Posted by troy @ 08:36 PM (292 views) Add Comment
2 Comments
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1. drewster said...
Good post.
"What surpluses they [the Chinese] may have could be directed to their domestic economies, reducing their ability to acquire our bonds"
So the Chinese are too busy spending their own way out of a crisis to bother helping the rest of the world. The new US stimulus package won't be funded through debt - it is being paid for by freshly printed dollar bills. How much reflation will it take to rescue the economy and keep people in jobs? Can it even work at all?
2. stillthinking said...
An unpleasant possible truth. QE is required because of a bond strike.
I must be pretty ignorant though because I thought that the reason that they were called "bond auctions" was because in different variations people bid on the yield. As in, the government would sell bonds to me if I accepted 2% as opposed to somebody else's 3%. So I never really thought of it as an actual strike, as in refusal, more that the required yields went up.
Perhaps the government offers a fixed yield and the original purchase price moves. Because if neither of those happen then bond auction is a stupid description, bond sale would be better. And under a sale then there could be a buyers strike.