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Posted by
Olog-hai
on Tue Feb 17 01:34:09 2009
edf40wrjww2msgDetailOT:detailStr fiogf49gjkf0d Gotta admire Luo Ping's frankness; he actually said that (twice). I don't hate them guys, but I hate their communism, along with bipartisan avarice stateside (which, coupled with corporate avarice, has led down this road). The ECB must be watching this while licking their chops, because they know a crisis will make them look like the safe haven . . .
Financial Times
China to stick with US bondsBy Henny Sender in New York
Published: February 11 2009 23:33 | Last updated: February 11 2009 23:33China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.
China has used the dollars it accumulates selling manufactured goods to US consumers to accumulate the world’s largest holding of Treasuries.
However, the increasing US budget deficit and its potential impact on the dollar have raised questions about the future Chinese appetite for US debt.
Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York that China would continue to buy Treasuries in spite of its misgivings about US finances.
Mr. Luo, speaking at the Global Association of Risk Management’s 10th Annual Risk Management Convention, said: “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
Mr. Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion . . . we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do.”
However, Mr. Luo said Chinese officials would encourage its banks to finance domestic mergers and acquisitions rather than provide rescue finance to distressed financial companies in other countries: “There will be no bottom-fishing of financial institutions, particularly in the US, because there is a lot of uncertainty about the quality of the books.”
Mr. Luo said China intends to maintain its separation of investment and commercial banking based on its observations of the US after repeal of the Glass-Steagall Act that enforced a similar division of banking activities.
“To some extent, Glass-Steagall has fuelled the crisis,” Mr. Luo said. “The separation of commercial and investment banking is likely to stay longer (in China) than before.” Like senior financial officials in other developing nations — such as Mohammad Al Jasser, vice-governor of the Saudi Arabian Monetary Agency — Mr. Luo also spoke out against what he called America’s laissez-faire capitalism.
“Government ownership was viewed as something negative but the pendulum is swinging the other way. Perhaps banking is (no different from) public utilities where government participation is necessary,” he said.
“Deregulation in the US has gone a little bit too far. The market can’t be omnipotent.”
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