The Chairman of the China Construction Bank publicly suggested issuing bonds in RMB, rather than USD.
As long as Tim Geithner is Treasury Secretary, this is not a bad idea.
Our Treasury policy is to enrich political friends of Tim Geithner and the Democratic Pary, such as the United Auto Workers and top Wall Street executives. As the focus is not economic growth, it would be foolish for other countries to buy dollars in the hopes that Geithner would suddenly start caring about America’s future more than the future of his friends.
The UAW were large unsecured creditors for GM and Chrysler, and now they are the largest shareholder in this companies, along with Geithner’s Treasury Department. Goldman Sachs was given billions in grants they never have to repay, while Citi is being kept alive as a Zombie bank because Wall Street speculators were Obama’s strongest supporters in the 2008 campaign (and doubtless will be again in 2012).
China and other countries realize this, which is one reason why they are rapidly spending down their dollars, buying less new ones, and in general trying to decouple their future from Geithner’s plans to the extent possible.