Clearly, the Obama admin. has gotten the word to Hillary to play nice with the Chinese. I’m sure the Obamaites are very concerned that if the Chinese find some other place to put their $40 billion monthly account surpluses, we might not be able to fund all of our bail-out plans. Ambrose does talk about the possibility of a back-door default by the US through inflation (which kills the value of bonds), and I’m sure that foreign purchasers of both treasuries and agency debt will keep an eye our our inflation numbers going forward.

What do you make of this? Ambrose manages to discuss East Asia’s concerns on treasuries and Hillary’s soothe-fest without dealing with agencies at all.

“Hillary Clinton pleads with China to buy US Treasuries as Japan looks on”, Ambrose Evans-Pritchard, Telegraph, February 22, 2009.

Chinese media reports say Mrs Clinton has offered emphatic assurances to premier Wen Jiabao and President Ju Jintao that the Obama administration intends to restore the health of US public accounts and safeguard the interests of bondholders once the economy has begun to recover.

Isn’t it funny that cuts in government spending are always years away (and taken credit for before they ever happen, so that people can forget and the media can decline to mention it when they don’t happen at all) while the need to spend is always right now…

I hadn’t realized that by keeping a little wiggle room in their guarantee, the government was keeping the Fannie/Freddie debt off balance sheet. With Pres. Obama’s rhetoric about reducing the federal debt two-thirds by 2013, I suspect that the pressure will be on to keep the guarantee fuzzy. However, the administration will have no choice but to fold as foreign investors apply pressure on the treasury to step up and give the explicit guarantee, or they will take their money and go home

You are so right. This selfish thinking from the government officials/ceo’s and the majority of the United States citizens has caused this whole mess. Whats worse is that this thinking is still quite prevalent and will not stop until everything totally collapses, which is probably not far off.

Igor is right again when he says “gloomy”

And it seems unlikely that this will be put on the books anyway – the government has little incentive to act honestly here. I doubt foreign central banks are going to start screaming about it knowing that they should’ve seen it all along, and telling the American people we’ve suddenly doubled the size of the national debt to pay other people’s mortgage obligations is certainly not something that will sit well, at least with half of the population.

Then again, the other half may well support this if for some reason it becomes necessary, and you only need 51% (if that), right? They’ve already spent a trillion this week and are proposing to bump it by another 300 billion next week, what’s another few trillion. It’s all just paper, right? If you have no savings, and the government is going to meet all your needs for medical care and everything else, why do you care about currency devaluation? No one will think about the longer term effects, because most politicians will be out of office by the time those things come to pass, and the majority of voters are not, sadly, voting for preserving the dollar or the American dream or anything else for the future, they’re voting based on the handout they can get right now. I want Obama to pay for my $800k home and retirement! So it goes with the buy now pay later generation.