Spurned lovers
Everyone enjoys the occasional lover’s spat. Who hasn’t spent a day sprawled out on that plush apartment sofa, sipping Kool-Aid – maybe a lil’ Sergio Mendes on – all to maximize the pleasure of listening to the neighbors discover their pregnancy test results? Enter China and the US, who this week brought enough emotional baggage to the APEC table to fill a thousand social housing project homes holes. Here’s the deal: The US is here to stay, but China wants to see other people without America interfering. China’s moving up in the world, and America knows it. So suddenly little things become big things, like when the US House Committee opens an investigation of Huawei and ZTE. “The fact that our critical infrastructure could be used against us is of serious concern,” said Rep. Mike Rogers, adding that the situation was “sorta like that one Will Smith movie where robots help people but then suddenly go all [expletive] crazy.” In truth, everyone knows that while America’s got new friends, China’s got homies, but in the end they’re both still lonely. So China keeps buying US debt, the US keeps buying Chinese goods, Barack and Jintao kiss and make up, and Sergio Mendes plays on…
Bring it, IMF
For the finance nerds among us, the guy that really brought the drama this week was the IMF with a fun new report on the “steady build-up of financial sector vulnerabilities.” Here’s a morsel that could have been pulled straight from page six: “The size of infrastructure-related lending to local governments is non-trivial. At market estimated RMB7.7 trillion as of end-June 2010, it is equivalent to 16% of outstanding loans and 23% of GDP at end- 2009.” So it should come as a reassurance that China took a symbolic step in expanding that same system this week with the first municipal bond sales in 17 years. Everybody congratulated everybody on a successful sale in which the yields were wonderfully low – a sign of investor confidence in the system, they said. Or perhaps it was knowing that that fierce guard-dog of impartiality, Dagong Global, was napping at the gates? Or just maybe it was the great news trumpeted by the People’s Daily. Next to such articles as “Jinan military region drill enters critical stage” and “Cute sleeping babies” (you know you want to!), the newspaper trumpeted, “After 30 years, legal system is fully formed.”