China is worried that the U.S. will default on the $1 trillion loan China gave us to, among other things, build McMansions and sell them to each other.
If China gets too worried, they’ll stop lending us more money to pay ourselves while no one is buying McMansions, and interest rates will skyrocket, screwing us. So Obama is trying to assure China president Wen Jiabao that we’re good for the money.
Which we probably are. In nominal dollars. But wait until we get through inflating our way out of the problem.
Bloomberg: The U.S. sought to ease Chinese Premier Wen Jiabao‘s concern about the security of his country’s investments in U.S. government debt, reiterating pledges to cut the budget deficit in half in four years.
“There’s no safer investment in the world than in the United States,” White House Press Secretary Robert Gibbs said yesterday at a briefing in Washington.
Gibbs was responding to comments from Wen that China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe. “I request the U.S. to maintain its good credit, to honour its promises and to guarantee the safety of China’s assets,” Wen said at a press briefing in Beijing. Keep reading >