What Are We Wrong About?

A few years ago science writer Steven Johnson wrote a book called Everything Bad is Good for You. In it, he challenges the conventional wisdom that certain forms of flashy, mass appeal media pose a public health risk. Instead, he argues, video games represent powerful problem-solving simulators and sleazy reality TV shows some kind of elaborate sociological experiment. He makes a good case.

In the same spirit, Slate's Jacob Weisberg has queued up a few sacred cows for slaughter as well, or at least a critical review. Nuclear proliferation? Not so bad, maybe. Global warming? Chill out. China the next ultra-superpower? Yeah, no.

Big Red

President Barack Obama met Chinese President Hu Jintao for the first time Wednesday, prior to the pivotal G20 summit commencing today. Hu reportedly made reassuring noises to the US president about Chinese resolve to close the massive trade gap between the two countries.



"Ching chong bing bong," the Chinese president told Obama, "Ringa ringa ding dong."

For his part, the US president said his government will do what is possible to prevent the dollar from falling below the value of a single sheet of toilet paper.

"Sunshine, butterflies, baby smell," Mr. Obama detailed, "Puffy clouds and rainbows. Strawberry milkshake."

The two then shared an eggroll.

State Department Seeking China Clout

The girl from (fill in Rustbelt hometown) wants a diplomatic third way for her State Department in dealings with China, a relationship which she describes as "the world's most important". Engagement with the burgeoning Communist superpower thus far has been dominated by a two-pronged military and economic approach led by the Defense and Treasury departments respectively. The military makes sure to stay on top of capabilities for sending China back to the Stone Age, while Treasury takes on most of the diplomatic burden, focused so much on commerce as that channel tends to be. So instead of Hillary Clinton wearing a funny hat and having her picture taken shaking hands, you get Timothy Geithner going out of his way to flatter a Chinese counterpart at his own expense, which he made a point of doing this week while considering the merits of a politically toxic proposal on changes to reserve currency.

But the State Department wants a piece of that action, and they're going to get it. Let's just hope there won't be too many cooks in the kitchen. Hillary's been a good role player in the Senate, when her own, ruthless ambition hasn't gotten in the way. If she can define her role her and be faithful to it, then all the better for US/China relations.

"Evolutionary"

Treasury Secretary Tim Geithner told reporters at a Council on Foreign Relations event today that the United States is "open" to suggestions from China's top banker that nations take steps to extend the special drawing rights of the International Monetary Fund toward a new global reserve currency. The dollar tracked down by less than two percent before picking back up by the time the Secretary clarified the government's position, several minutes later. Bottom line: the adminstration wants to send very clear signals that a strong dollar is in America's best interest, and as the president himself pointedly assured during his press conference last night, the United States has no plans to see a "new global currency" replace the dollar.

Geithner, demonstrating a bracingly misplaced confidence in his audience, explained that his understanding of the Chinese proposal had to do with moving the dollar itself, in its own "evolutionary" progression, toward a reserve currency that is more responsive to the demands placed upon it by the global market. As he put it:

We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union.

Of course the effective headline out of this foolhardy attempt at drawing a reasonable distinction has been "Bumbling Treasury Secretary Supports Dumping Dollar". That's the reward for intellectual honesty these days. I won't pretend to understand the full scope of this issue, but I for one am very happy at least to see some mental flexibility from Mr. Geithner. To his credit, he resists the temptation to paint every scenario as black and white.

You never know, keep treating people like adults and they might just start acting like it.

Never Mind

The Chinese are going to buy up more US debt anyway.

Sneaky Chinamen!

Zhou Xiaochuan, China's Ben Bernanke, has proposed a new, international monetary standard to replace the current model of a US dollar-dominated market. No, evangelicals, it's not the "one world currency" from your End Times adventure stories. George Will, in his ridiculous bow tie, reminds us that:

[China's premiere] has rightly noted the unsustainable trajectory of America's high-consumption, low-savings economy. He has also decorously but clearly expressed sensible fears that his country's $1 trillion-plus of dollar-denominated assets might be devalued by America choosing, as banana republics have done, to use inflation for partial repudiation of improvidently incurred debts.

So it could be that China, the single largest holder of American foreign debt, might just be a tad concerned about their investment. Or, we can believe that the head of People's Bank of China is working for... THE DEVIL!