China Central Bank Attacks Paulson’s ‘Gangster Logic’

China overtook Japan as America’s biggest foreign creditor in September and as of October held 652.9 billion dollars in US Treasury bonds.

So it is China who is financing the unsustainable, debt amassing lifestyle of the US by buying US Treasuries. It is China who keeps the USS Titanic afloat. Whereas Bernanke and Paulson are doing everything in their might to destroy the dollar and the US.

When it will become obvious that the Fed has created massive inflation by creating trillions of dollars out of thin air China will sell its US Treasuries and exit the dollar, which will in turn accelerate the crisis.

Bernanke and Paulson will probably blame China then again for sinking the USS Titanic, after they hit intentionally and with full force the iceberg … with China only trying to make the best of a bad job.

Jan. 16 (Bloomberg) — A Chinese central bank official attacked reported comments by U.S. Treasury Secretary Henry Paulson that China’s high savings rate helped trigger the global credit crisis.

“This view is extremely ridiculous and irresponsible and it’s ‘gangster logic,'” Zhang Jianhua, the bank’s research head, said. His comments were in an interview with the state-run Xinhua News Agency, posted on a government Web site today.

Commentaries by China’s state media this month had already accused Paulson and Federal Reserve Chairman Ben S. Bernanke of playing a “blame game” over the cause of the crisis.

Friction between the two nations includes a U.S. complaint to the World Trade Organization last month that China uses prohibited subsidies to boost exports. The U.S. also regards China’s currency, the yuan, as undervalued and a factor in global trade imbalances.

Massive savings accumulations in countries such as China helped to trigger the crisis by squeezing interest rates and pushing investors toward riskier assets, the Financial Times reported Jan. 2, quoting Paulson.

Zhang countered that U.S. policies that aggravated imbalances in that nation’s economy, which was excessively dependent on consumer spending, were a key cause. He also cited failures in corporate governance and risk management at investment banks.

‘Finding an Excuse’

“The ‘China-responsible theory’ is an attempt by major western economies to find an excuse for their own policy and regulatory failures,” Zhang said in the transcript. “I’m afraid these countries are also finding an excuse to issue trade protection measures or impose pressure on China in the future.”

Zhang also criticized the International Monetary Fund for paying too much attention to financial risks in emerging and developing economies and not enough to those of developed countries, “which have a larger impact, especially economies issuing major reserve currencies.”

The organization also didn’t respond quickly enough to the crisis, he said.

China’s trade surplus is partly caused by developed nations’ restrictions on technology exports, Zhang said. Last year’s surplus was a record $295.5 billion.

To contact the reporter on this story: Li Yanping in Beijing at [email protected]

Last Updated: January 16, 2009 06:27 EST
By Li Yanping

Source: Bloomberg

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