Friday, March 13, 2009

This is how it starts

Alternative title: "Well, duh."

From the New York Times:

"The Chinese prime minister, Wen Jiabao, spoke in unusually blunt terms on Friday about the 'safety' of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to offer assurances that the securities would maintain their value.

"Speaking ahead of a meeting of finance ministers and bankers this weekend near London to lay the groundwork for next month’s Group of 20 summit meeting of the nations with the 20 largest economies, Mr. Wen said that he was 'worried' about China’s holdings of United States Treasury bonds and other debt, and that China was watching economic developments in the United States closely....

"In January, Mr. Wen gave a speech criticizing what he called an 'unsustainable model of development characterized by prolonged low savings and high consumption.' There was little doubt that he was referring to the United States."

If I were Wen, I'd be worried too.

This is how a nation's credit reputation starts unraveling.

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