Archive for the ‘U.S.’ Category

Why Singapore is another model for teaching excellence

March 24, 2009

Steven Paine had an aha moment while visiting Singapore last spring. The superintendent of West Virginia’s schools was there with other education leaders to see what makes schooling in the city-state so successful, particularly in math and science.

By Stacy Teicher Khadaroo | Staff writer of The Christian Science Monitor

When he asked a Singapore official about the basis of their math curriculum, she cited a standards framework put out by the National Council of Teachers of Mathematics – in the United States. West Virginia’s curriculum takes guidance from the same source, Mr. Paine says. “So the question remains, why is it that they lead the world in student achievement? I think it’s because of their teacher quality,” he says.

Only the top third of secondary-school graduates in Singapore can apply for teacher training. The National Institute of Education winnows that field down more and pays a living stipend while they learn to teach. Each year, teachers take an additional 100 hours of paid professional development. And they spend substantial time outside the classroom to plan with colleagues.

Not only is teaching an honored profession in Singapore, but it’s also paid as well as science and engineering careers, according to a report by the Council of Chief State School Officers (CCSSO) and Pearson, the groups that organized the Singapore conference for representatives from 13 nations.

“What I really came away with was that we need to invest in a structure to support high-quality teaching,” Paine says. “In West Virginia, we’re calling that ‘building the back porch’ – that place where teachers can come together and discuss innovative ideas … [and] engage in research-based professional development.” He’s seen a number of low-performing schools improve after a concerted effort along these lines.

A similar gathering will bring state school officers to Finland this fall, to “triangulate … [and ask,] What can we learn that’s similar from these two high-performing countries?” says Scott Montgomery, deputy executive director of CCSSO in Washington. “We can’t control every aspect of the system the way they can in Singapore…. [But] at the state level, a lot of our members were saying, we can control university preparation programs [and] some licensure systems.”

Read the rest:
http://www.csmonitor.com/2009/
0324/p12s01-ussc.html

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China cements role as top creditor to US

March 17, 2009

China consolidated its position as the top creditor to the United States, with 739.6 billion dollars in US Treasury bond holdings as of late January, US government data showed.

The US Treasury Department released the monthly figure at a sensitive time, less than a week after Chinese Premier Wen Jiabao expressed concern about the fate of Chinese investments in the United States.

AFP

It marked growth from 727.4 billion dollars of Chinese-held Treasury bonds at the end of December and was up from the 492.6 billion dollars China held in January 2008, according to the Treasury statistics.

While that year-on-year figure represents a sharp increase, much of it was down to big rises in September and October.

China has been the biggest holder of US Treasury bonds since September last year, when it overtook Japan for the first time ever, according to US data.

However, it issued its most high-level note of alarm yet last Friday when Wen admitted to being worried about China’s massive investments in US debt.

“We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets,” he told a press conference here.

US President Barack Obama later responded with an assurance that “not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States.”

Lawrence Summers, director of the White House’s National Economic Council, denied Sunday that US Treasury bonds might lose their “AAA” rating from credit agencies because of the economic crisis.

Japan remained the second-largest holder of US debt at the end of January, with 634.8 billion dollars, up from 626.0 billion at the end of December, the Treasury statistics showed.

US Treasury bonds are a preferred investment vehicle for China’s government as it seeks safe and reliable ways to place its nearly two trillion dollars of foreign exchange reserves.

Losing Terror War? Al Qaeda, Afghanistan, Iran

March 11, 2009
Defense Intelligence Agency chief Army Lt. Gen. Michael Maples tells senators during a Capitol Hill hearing that Al Qaeda has resurfaced in a country it was forced to flee seven years ago.
By Greg Miller
Los Angeles Times
March 11, 2009
Reporting from Washington — Al Qaeda has expanded its presence in Afghanistan, taking advantage of the sinking security situation to resurface in the country it was forced to flee seven years ago, the top U.S. military intelligence official testified Tuesday.

Army Lt. Gen. Michael D. Maples, director of the Defense Intelligence Agency, described Al Qaeda’s efforts as one of the reasons for the Obama administration’s decision last month to order additional troops to Afghanistan.

Afghanistan is no longer the haven for Al Qaeda that it was before the Sept. 11 attacks in the United States. But in testimony before the Senate Armed Services Committee, Maples said, “I believe Al Qaeda’s presence in Afghanistan is more significant, although still at a relatively minor scale, than we have seen in the past.”

Maples also cited intelligence indicating that Iran is playing a more active role in supporting a militant group based in Pakistan that is launching attacks against U.S. and Afghan forces.

Read the rest:
http://www.latimes.com/news/nationworl
d/world/la-fg-intel11-2009mar11,0,421
8559.story

Intelligence Officials Testify On National Security Threats 
.
Director of National Intelligence Dennis C. Blair, left, and Defense Intelligence Agency chief Army Lt. Gen. Michael D. Maples testify on Capitol Hill at a hearing of the Senate Armed Services Committee. Maples said Al Qaeda has resurfaced in Afghanistan in a way not seen since the 2001 U.S.-led invasion. Blair said the U.S. intelligence assessment is that Iran does not have any highly enriched uranium.  Alex Wong / Getty Images

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A progressive Presidency is a terrible thing to waste. It only comes around once every so often. Wouldn’t it be a shame if Americans’ hopes for the Obama Administration were squandered in Afghanistan?

See:
http://nasir-khan.blogspot.com/2009/03/c
an-congress-save-obama-from-afghan.html

Treasury might not be up to the job of fighting recession

March 10, 2009

The Treasury might not be “up to the job” of spearheading the British Government’s response to the recession, according to the IPPR, one of Labour’s favourite think tanks. Britains worry…

By Christopher Hope
The Telegraph (UK)
Senior officials from the IPPR, the Institute of Public Policy Research, also questioned whether Gordon Brown’s policy of appointing former bankers as ministers was appropriate in dealing with “problems that banks have caused themselves”.

The Treasury was “not in good shape” to cope with the pressures of becoming a more interventionist Government while keeping a right rein on public spending, the IPPR said.

Guy Lodge and Tony Dolphin from the Institute said: “The lights are on in the Treasury but who is minding the tills? After hiving off so much responsibility for fiscal and monetary policy, the department is not in good shape to tackle the biggest economic crash for decades.”

They said part of the problem was that, when Mr Brown was Chancellor between 1997 and 2007, the Treasury spread itself too thinly and became a “Department for the Domestic Front”, wrapping its “tentacles” around large swathes of policy including welfare reform and child poverty.

This has meant that when the economy went downhill, the Treasury lost its core skills of keeping a check on the public finances and lost touch with its “conventional role of saying ‘no'” to more public spending.

In article in this week’s edition of ‘Public Finance’, the pair said: “Genuine doubts have been raised about whether the Treasury has the people it needs to face all these challenges simultaneously.

“The ‘Alistair and Mervyn’ show might be about to hit the road. It remains to be seen whether Treasury staff are well placed to support such a ‘show’.”

The departments suffers from “ridiculously high turnover rate in posts”, they said, adding: “Treasury officials rarely spend more than a year in post before moving on. This weakens the department’s skills base and deprives it of specialist expertise.”

Staff numbers have been cut by 17 per cent over the past four years. More cuts are planned by 2011. To make matters worse, the Treasury has also had problems filling policy posts. A recruitment drive last year was “only partially successful in plugging the skills gap”, leaving the Treasury short of vital skills.

They said: “One consequence of these changes is that today’s Treasury has few staff with experience of fighting a recession or dealing with a major economic calamity.”

Read the rest:
http://www.telegraph.co.uk/finance/financetopics/rec
ession/4967743/Treasury-might-not-be-up-to-the-jo
b-of-fighting-recession-warns-IPPR.html

And other than Turbo Tax manipulation, what is U.S. Treasury Secretary Tim Geithner’s experience in dealing with recession?

North Korea Warns: Shoot Down Our Satellite Will “Prompt Counterstrikes by the Most Powerful Military Means”

March 9, 2009

North Korea warned Monday that any move to intercept what it calls a satellite launch and what other countries suspect may be a missile test-firing would result in a counterstrike against the countries trying to stop it.

By AP and Kyodo

“We will retaliate (over) any act of intercepting our satellite for peaceful purposes with prompt counterstrikes by the most powerful military means,” the official Korean Central News Agency quoted a spokesman of the General Staff of the Korean People’s Army as saying.

If countries such as the United States, Japan or South Korea try to intercept the launch, the North Korean military will carry out “a just retaliatory strike operation not only against all the interceptor means involved but against the strongholds” of the countries, it said.

“Shooting our satellite for peaceful purposes will precisely mean a war,” it added.

North Korea earlier announced it is preparing to put a communications satellite into space, but outside observers suspect it may in fact be a test-firing of a long-range ballistic missile.

The United States, Japan and South Korea have said that even if Pyongyang calls the launch a missile test, it would violate existing U.N. Security Council resolutions.

The same North Korean statement said the country’s military will cut off communications with its South Korean counterparts during the U.S.- South Korean exercises for the duration of the exercises beginning Monday.

A separate, more rare statement by the KPA’s Supreme Command was quoted by the KCNA as saying that its soldiers are under orders to be “fully combat-ready” during U.S.-South Korean military exercises beginning Monday.

The North’s armed forces have been ordered to “deal merciless retaliatory blows” should there be any intrusion “into the sky and land and seas of the DPRK even an inch.”

DPRK stands for Democratic People’s Republic of Korea, North Korea’s official name.

North Korea has demanded a stop to this month’s U.S.-South Korean exercises, and said earlier it cannot guarantee the security of South Korean civilian airplanes flying through its territorial airspace while they are under way.


A U.S. Navy ship launches ballistic missile defense interceptors like those that could be used to counter North Korea’s long range missile launch….

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North Korea Again Issues War Warning

By JAE-SOON CHANG, Associated Press Writer

North Korea put its armed forces on standby for war Monday and threatened retaliation against anyone seeking to stop the regime from launching a satellite into space in the latest barrage of threats from the communist regime.

Pyongyang also cut off a military hot line with the South, causing a complete shutdown of their border and stranding hundreds of South Koreans staying at an industrial zone in the North Korean border city of Kaesong.

The warning came as U.S. and South Korean troops kicked off their annual war games across the South, exercises the North has condemned as preparation for an invasion. Pyongyang last week threatened South Korean passenger planes flying near its airspace during the drills.

Analysts say the regime is trying to grab President Barack Obama‘s attention as his administration formulates its North Korea policy.

Read the rest:
http://news.yahoo.com/s/ap/20090
309/ap_on_re_as/as_koreas_tension

China’s thirst for copper could hold key to Afghanistan’s future

March 8, 2009

In this Taliban stronghold in the mountains south of Kabul , the U.S. Army is providing the security that will enable China to exploit one of the world’s largest unexploited deposits of copper, earn tens of billions of dollars and feed its voracious appetite for raw materials.

U.S. troops set up bases last month along a dirt track that a Chinese firm is paving as part of a $3 billion project to gain access to the Aynak copper reserves. Some troops made camp outside a compound built for the Chinese road crews, who are about to return from winter break. American forces also have expanded their presence in neighboring Logar province, where the Aynak deposit is.

By Jonathan S. Landay, McClatchy Newspapers

The U.S. deployment wasn’t intended to protect the Chinese investment — the largest in Afghanistan’s history — but to strangle Taliban infiltration into the capital of Kabul . But if the mission provides the security that a project to revive Afghanistan’s economy needs, the synergy will be welcome.

“When you have men who don’t have jobs, you can’t bring peace,” said Abdel Rahman Ashraf , a German-trained geology professor who’s Afghan President Hamid Karzai‘s chief mining and energy adviser.

“When we take money and invest it in a project like Aynak, we give jobs to the people.” Indeed, the project could inject hundreds of millions of dollars in royalties and taxes into Afghanistan’s meager coffers and create thousands of desperately needed jobs.

Beijing faces enormous challenges in completing the project and gaining access to the estimated 240 million tons of copper ore that are accessible through surface mining. Taliban -led insurgents operate in large parts of Logar and Wardak; the area is sown with mines; and China must complete an ambitious set of infrastructure projects, including Afghanistan’s first national railway, as part of the deal.

China’s willingness to gamble so much in one of the world’s poorest and riskiest nations testifies to its determination to acquire the commodities it needs to maintain its economic growth and social stability.

Read the rest:
http://news.yahoo.com/s/mcclatchy/2
0090308/wl_mcclatchy/3182860_1

The struggle for commodities….
 Russia, “Desperate For Cash,” Sells Oil to China In “Very Bad Deal”

Iran test-fires new long-range missile

March 8, 2009

Iran has test-fired a new long-range missile, the country’s state Press TV reported on Sunday.

Reuters

Iran often stages war games or tests weapons to show its determination to counter any attack by foes including Israel and the United States, which accuse the Islamic Republic of seeking to develop nuclear bombs. Tehran denies the charge.

“Iran test fires new long range missile,” Press TV, Iran’s English-language television station, said in a scrolling headline without giving details.

The Press TV report came less than a week after a top Iranian military commander said that Iranian missiles could now reach Israeli nuclear sites.

Israel has not ruled out military action if diplomacy fails to end the row over Iran’s nuclear aims, echoing U.S. policy, though U.S. President Barack Obama has also offered to engage Iran in direct talks if it “unclenches its fist”.

Iran has often said it has missiles able to reach the Jewish state but had not previously mentioned such specific targets. Israel is believed to be the only nuclear-armed Middle East state.

Related:
Russia, U.S. Missile Defense Dispute

Russian Relations With U.S., Europe Improve: But Putin, Medvedev Understand Strength, Power More than Diplomacy

 Russia Sees Obama, U.S., Others As “Weak,” “Naive”
.
Israel Ponders War on Iran; Obama, Russia HaggleRussia Testing Obama: Just as Biden Predicted
.
Russia building anti-satellite weapons

 Russia: Medvedev Pushing Putin Out?

Russia Verifies “American, Western Weakness”

 

Russia Sees Obama, U.S., Others As “Weak,” “Naive”

Mr. Obama and Russia
NYT Editorial: Russia only understands strength….

 Chutzpah: Admire Russia’s Arrogance

Russia, Obama and the Strategic Chess Tournament

Global Economy Weakness Leading To Social Unrest

March 8, 2009

“If not handled, today’s financial crisis will become tomorrow’s human crisis. Social unrest and political instability will grow, exacerbating all other problems.”

That according to United Nations Secretary General Ban Ki-moon.

In China, Russia, France, Iceland and Britain, some leaders already fear that the worsening global economy will result in calls for new governments with new leaders and fresh ideas.

The Independent reported this week:

“China’s growth has dropped from 13 per cent in 2007 to 6.8 per cent in the most recent quarter. The rapid slowdown in the global economy, and in the US in particular, has hit China’s export-led economy, which has been at the heart of wider Asian growth in recent years. While extremely high compared with growth levels in mature economies, the slower pace is well below the 8 per cent the Government needs to create jobs for the millions of rural workers heading for China’s cities.The slowdown has left 20 million rural labourers unemployed, with 7 million college graduates also seeking work. The authorities are desperate to stop sporadic clashes between police and protesting workers turning into more general unrest against the Communist Party. ”

In Berlin, German, economically displaced people are setting paked luxury cars on fire.

In Russia there has been social unrest but leaders believe that welfare programs recently put into place will ease tensions.

“I believe that the current economic crisis will not damage social stability so severely,” Medvedev said in an interview with the Spanish media this week.

The “Tea Party” tax protests in the U.S. are rather small and mild mannered but indicate that many in America are also getting edgy with the poor economy and the solutions their governments are recommending.

Related:
http://www.globalenvision.org/tags/
social-unrest

Independent on China:
http://www.independent.co.uk/news/business/
news/china-to-announce-extra-stimulus-as-fear
s-of-social-unrest-rise-1637743.html

https://arturoafc54.wordpress.com/categ
ory/social-unrest/

Michelle:
http://michellemalkin.com/2009/03/07
/tea-party-on-taxpayer-revolts-in-green-
bay-lafayette-olathe-and-harrisburg/

Global Economy Sparks Protests; Governments Fear Greater “Social Unrest”

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In Paris, protestors voice concerns at failing economy, overtaxed social services

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Wealth Battlefield

By Michelle Malkin
The Washington Times

Enough. In a word, that is the message of disgusted taxpayers fed up with the confiscatory policies of both parties in Washington. George Bush pre-socialized the economy with billion-dollar bailouts of the financial and auto industries. Barack Obama is pouring billions more down those sinkholes. It isn’t just the camel’s back that’s broken. His neck and four legs have all snapped, too.

Enough. Last Friday, thousands of Americans turned out to protest reckless government spending in the pork-laden stimulus package, the earmark-clogged budget bill, the massive mortgage-entitlement program and taxpayer-funded corporate rescues.

Contrary to false left-wing blog smears that the hastily planned impromptu events were “Astro-turfed,” the crowds were packed with first-time grass-roots activists. They were people with families and day jobs whose usual definition of “community organizing” involves neighborhood yard sales or their kids’ soccer matches. They were members of the silent majority who decided to be silent no more.

Read the rest:
http://www.washingtontimes.com/news
/2009/mar/08/wealth-battlefield/

Top U.S. Military Leader Offers Help to Mexico; Briefs Obama

March 7, 2009

The chairman of the Joint Chiefs of Staff said the United States could help with equipment and intelligence techniques after returning from a six-day trip to Latin America punctuated by news of beheadings and intimidation by Mexican drug cartels.

Mexico could borrow from U.S. tactics in the fight against terrorism as it battles a crisis of drug-related violence along the U.S.-Mexico border, the top U.S. military officer said Friday.

Returning from a six-day trip to Latin America punctuated by news of beheadings and intimidation by Mexican drug cartels, the chairman of the Joint Chiefs of Staff said the United States could help with equipment and intelligence techniques.

Adm. Mike Mullen would not be specific about what kind of intelligence or surveillance help the United States might offer, but said he saw ways to employ experience the United States has gained in the ongoing hunt for extremists and terrorists.

He would not say whether there may already be U.S. drones flying over bloodstained cities such as Ciudad Juarez, where 17 bodies came into the morgue on one day recently, including the city police force’s second-in-command and three other officers.

“Obviously it affects us because of the relationship between the two countries,” Mullen said during a telephone news conference as he flew to Washington following meetings in Mexico, his last stop.

Mullen referred to the spike in violence as a crisis, and said it occupied much of his discussions with Mexican military leaders.

More than 1,000 people have been killed in Mexico in drug-related violence this year. In 2008, the toll doubled from the previous year to 6,290. Both the U.S. and Canada have warned that murders related to drug activity in certain parts of Mexico, particularly along the border with the U.S., raised the level of risk in visiting the country.

There are signs the violent competition among Mexican drug and smuggling cartels is spilling across the border, as cities in Arizona report increases in such crimes as home invasions. More than 700 people were arrested as part of a wide-ranging crackdown on Mexican drug cartels operating inside the United States, the Justice Department said last month.

Last weekend, Defense Secretary Robert Gates said he also saw opportunities for the U.S. military to help with military training, resources and intelligence.

“I think we are beginning to be in a position to help the Mexicans more than we have in the past. Some of the old biases against cooperation with our — between our militaries and so on, I think, are being set aside,” Gates said in an interview that aired last Sunday on NBC’s “Meet the Press.”

“It clearly is a serious problem,” he said.

Related:
http://eideard.wordpress.com/2009/03/08/o
bama-mullen-discuss-mexicos-drug-wars/

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By ANNE GEARAN, AP Military Writer

President Barack Obama was briefed Saturday by Joint Chiefs of Staff Chairman Adm. Mike Mullen about the drug wars in Mexico and wanted to know how the United States can help.

“Clearly one of the things the president was interested in was the U.S military capability that may or may not apply to our cooperation with the Mexicans,” said a U.S. military official who requested anonymity because the discussions were private. “He was very interested in what kind of military capabilities may be applied.”

Mullen briefed Obama Saturday morning about discussions with Mexican military leaders about the drug wars there.

Read the rest:
http://news.yahoo.com/s/ap/2009030
8/ap_on_go_pr_wh/us_mexico_9

Related:
http://edition.cnn.com/2009/WORLD/america
s/03/07/mexico.headless.bodies/index.html

http://mexicoinstitute.wordpress.com/200
9/03/03/factbox-ciudad-juarez-mexicos-m
ost-violent-city/

Stimulus: China Will Fund U.S. Debt But “We Hate You Guys”

February 13, 2009

Luo Ping, a director-general of the China Banking Regulatory Commission, explaining how China feels about having to continue to buy U.S. Treasuries:

“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….

Ping, “whose English tends towards the colloquial,” according to the Financial Times’ Henny Sender, also asked “Except for US Treasuries, what can you hold? 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.”

So China will keep buying U.S. debt. Somehow this is not entirely reassuring.

Related:
Obama Team Gloats: Winning isn’t everything; it’s the only thing
.
Blaming Republicans For Doubling The Debt; Obama Aims To Do The Same

From Salon:
http://www.salon.com/tech/htww/200
9/02/12/we_hate_you_guys/index.html

A Chinese customer shows off a handfull of hundred-yuan notes ...

Related:
 Obama: Outreach, Stimulus Shows Weakness on International Stage

China May Have Mafia View of Obama Stimulus: “Someday We Break Your Legs”

 Obama Caught Between World Leaders, Congress, U.S. Voters on “Buy American”

 Barack Obama: Credibility Lost?

What’s China’s Long Term Global Strategy?

Economic Stimulus About “Soul of America”

Biggest Beneficiary of U.S. Economic Stimulus?
.
China Starts to Set Limits On Its Biggest Borrower: Barack Obama and The U.S.

 Get the Feeling Russia and China Are Slicing Up The World and the U.S. Will Be Left Out?

Stimulus: “Buy American” Retained; Sure To Anger International Partners
.
China’s leader Hu Jintao cautioned President Obama about the “buy American” provision in the economic stimulus plan during a phone conversation….but a “Buy American” provision remains in the stimulus as passed….

China announced that President Hu Jintao, seen here in 2008, ...
President Hu Jintao of China (AFP/File/Louisa Gouliamaki)

A bank employee counts US dollar bank notes. The euro fell sharply ...

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By Belinda Cao and Judy Chen

Feb. 11 (Bloomberg) — China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.

Benchmark 10-year Treasury yields climbed above 3 percent this week on speculation the government will increase borrowing as President Barack Obama pushes his $838 billion stimulus package through Congress. Premier Wen Jiabao said last month his government’s strategy for investing would focus on safeguarding the value of China’s $1.95 trillion foreign reserves.

China may voice its concerns over U.S. government finances and the potential for a weaker dollar when Secretary of State Hillary Clinton visits China on Feb. 20, according to He Zhicheng, an economist at Agricultural Bank of China, the nation’s third-largest lender by assets. A People’s Bank of China official, who didn’t wish to be identified, declined to comment on the telephone.

Clinton Talks

“In talks with Clinton, China will ask for a guarantee that the U.S. will support the dollar’s exchange rate and make sure China’s dollar-denominated assets are safe,” said He in Beijing. “That would be one of the prerequisites for more purchases.”

Chinese Foreign Ministry Spokeswoman Jiang Yu said yesterday that talks with Clinton would cover bilateral relations, the financial crisis and international affairs, according to the Xinhua news agency.

The dollar fell 0.6 percent to 89.96 yen today on concern that the U.S. government’s bank-rescue plan will fail to revive lending. Treasuries declined as investors prepared to bid for a record $21 billion sale of 10-year notes today. The yield on the benchmark 10-year note rose three basis points to 2.83 percent.

Currency Reserves

“These comments are some sort of a threat but of course China can never get such a guarantee,” said Thomas Harr, a currency strategist at Standard Chartered Plc in Singapore. The U.S. may assure China that it will clean up the financial system and that it “won’t push for a weaker dollar but they can’t promise not to increase the fiscal deficit,” he said.

U.S. government bonds returned 14 percent last year including price gains and reinvested interest, the most since rallying 18.5 percent in 1995, according to indexes compiled by Merrill Lynch & Co. Concern that the flood of bonds would overwhelm demand caused Treasuries to lose 3.08 percent in January, the steepest drop in almost five years, Merrill data show.

China’s loss of more than $5 billion from investing $10.5 billion of its reserves in New York-based Blackstone Group LP, Morgan Stanley and TPG Inc. since mid-2007 may increase its demand for the relative safety of Treasuries.

“The government will be a net buyer of Treasuries in the short term because there’s no sign they have changed their strategy,” said Zhang Ming, secretary general of the international finance research center at the Chinese Academy of Social Sciences in Beijing. “But personally, I don’t think we should increase holdings because the medium- and long-term risks are quite high.”

Fed Buying

Bill Gross, co-chief investment officer of Pacific Investment Management Co., said on Feb. 5 the Federal Reserve will have to buy Treasuries to curb yields as debt sales increase. Fed officials said Jan. 28 they were “prepared” to buy longer-term Treasuries.

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump.”

China’s foreign-exchange reserves grew about $40 billion in the fourth quarter, the least since mid-2004, as an end to yuan appreciation since July prompted investors to pull money out.

The world’s third-biggest economy grew 6.8 percent in the fourth quarter, the slowest pace in seven years. Policy makers announced a 4 trillion yuan ($585 billion) economic stimulus plan in November to spur domestic demand.

Linking Disputes

Yu said China has no plans to channel its reserves toward stimulating its own economy because its trade surplus is sufficient to fund any import needs. China’s trade surplus was $39 billion in January.

China “should diversify its reserves away from U.S. Treasuries if the value of China’s foreign-exchange reserves is in danger of being inflated away by the U.S. government’s pump- priming,” he said.

China may try to link trade and currency policy disputes to its future investment in Treasuries, said Lu Zhengwei, an economist in Shanghai at Industrial Bank Co., a Chinese lender partly owned by a unit of HSBC Holdings Plc.

U.S. Treasury Secretary Timothy Geithner accused China on Jan. 22 of “manipulating” the yuan to give an unfair advantage to its exporters. The currency has dropped 0.16 percent this year to 6.8342 per dollar, following a 21 percent gain since a peg against the dollar was abandoned in July 2005.

“China can also use this opportunity to get a promise from the U.S. not to make inappropriate requests on bilateral trade and the Chinese yuan,” Lu said. “We can’t afford more yuan appreciation as the economy is facing a serious slowdown.”

http://michellemalkin.com/2009/02
/13/the-house-dems-who-voted-no-
the-senate-vote-underway/