It appears that the vicious modern day triangle trade is on the verge of collapse.
The triangle trade that I refer to is national defense being provided by America in the Middle East for the free flow of oil to China, China manufacturing cheap goods for export to America using said oil as an economic lubricant, American dollars being then exported to China to buy their products in return for China holding massive amounts of the U.S. national debt.
This little deal has worked well…until now.
It appears the gig is almost up.
Recently, US Treasury Secretary Tim Geithner was in China, lauding the stability of the U.S. economy to students at Peking University.
According to the Financial Times [1], the students had a rather unique reaction that the secretary probably didn’t expect:
In response to a question after his speech, Mr Geithner told the student audience that “Chinese assets are very safe”, drawing loud laughter from his student audience – a reflection of scepticism among many Chinese about the wisdom of building up large foreign reserves.
Great.
On the anniversary of Tienanmen Square, where untold numbers of students were murdered by an oppressive regime, the students aren’t laughing at their own government, they’re laughing at ours.