Chinese Premier Wen Jiabao’s remark that he was “worried” about the $1 trillion in U.S. debt he was holding caused such a chill down the spine of world financial analysts that even the White House felt forced to respond immediately. “There’s no safer investment in the world than in the United States,” White House Press Secretary Robert Gibbs shot back that same day.
If the talk at the G20 gathering in England is any indication, the hard-beset global economy is stuck between the devil and the deep blue sea. From the American perspective, as articulated by Treasury Secretary Timothy Geithner, what the global economy needs is the same sort of placebo the American government has been administering domestically, to the delight of the ruling classes but the muffled dismay of the middle-class tax base: more stimulus spending.
H. Ross Perot used to talk about a “giant sucking sound” in the economy more than a decade ago. Back then, he talked about the North American Free Trade Agreement (NAFTA) taking American jobs away. But now the “giant sucking sound” is the sound of federal debt issuances draining money out of the private sector, where it's needed to finance the recovery.
Official Washington is an a tizzy over new revelations, courtesy of the Wall Street Journal and dutifully amplified by other news outlets, that as much as $50 billion of bailout money sent to ailing mega-insurer AIG was funneled to at least two dozen U.S. and European banks.