Geithner calling the Chinese "manipulators" is a pretty dumb thing for a debt-junkie to tell his supplier, publicly, to his "face". They won't dump Treasurys, they'll just sit back at auction -- like Lou Reed's lyric, "I'm waiting on my man / $26 in my hand [or: '$26 trillion out of hand'] / he's never early, he's always late / first thing you learn is that you always gotta wait". Geithner will learn to wait; the Chinese are patient. They have already shifted to shorter maturities (reported earlier this week).
Mr. Market is repricing the curve for the Chinese, but also for the massive global glut of government borrowing. We can't all be debtors at the same time. OECD countries and many of BRICs have demographic curves that are coming due soon too. (China's demographics are surprisingly old-world.)
JRB
1/23/09
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