Something about a pot and a kettle

February 12, 2009 in Finance,Politics

In his confirmation hearing (pdf link), Tim Geithner made the bizarre and potentially embarrasing statement:

President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practice.

Yesterday, citing "reckless policies" ahead of Hillary Clinton's visit next week, a former advisor to China announced that the United States "should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way" and threatened that China "should diversify its reserves away from U.S. Treasuries if the value of China’s foreign-exchange reserves is in danger of being inflated away by the U.S. government’s pump- priming."

In other words,

China will ask for a guarantee that the U.S. will support the dollar’s exchange rate.

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