It seems we can no longer play that game of our innocent childhood, ‘kicking the can down the road’. The game now is 'lengthening the fuse on the bomb', a new kind of 'chicken'.
A commentary on the agreement among political factions in the USA for raising the debt ceiling, carried by the Chinese state news agency Xinhua, attacked the "madcap farce of brinksmanship" and warned that the deal "failed to defuse Washington's debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer".
No doubt the Financial Health and Safety Agency will be on to this dangerous practice soon. Meanwhile the Chinese are trying to take their own precautions.
‘China is the world's second largest economy and the largest holder of US debt. It has more than $1tr of treasuries in its foreign exchange holdings, valued at around $3tr.’
Zhou Xiaochuan, ‘Chinese economist, banker, reformist, bureaucrat and governor of the People's Bank of China since December 2002’, added ‘that China would continue seeking to diversify its reserves. The challenge it faces is finding suitable alternatives.’
To the uninitiated that sounds remarkably close to saying that the Chinese have woken up to find that their wealth is in fact worthless and they can see nothing else of value to buy instead.
Xinhua 'added that "runaway debt addiction...[could] jeopardise the well-being of hundreds of millions of families within and beyond the US borders".'
'Some Chinese economists warned spending cuts could affect China's growth by slowing the US recovery. "US consumption will be definitely hurt a lot by the austerity deal and we can no longer count on the once-biggest foreign market in the future," said Ding Yifan, a researcher at the Development Research Centre under the State Council.'
You can tell it is serious because Barclays head honcho, Mr ‘Spare a Bob’ Diamond has wheeled himself out of the counting house to warn us all that if this country were to get up to such shenanigans it would be curtains for us, and maybe even him, though his curtains are more heavily braided and bomb-proof than most of us can afford. So keep up the good work, Mr Osborne (scion of those well-known curtain-traders to the gentry, Osborne and Little).
