Friday, December 05, 2008
The Presidential Salon in an undisclosed government palace, Beijing
Hu Jintao, President of the People's Republic of China
Wen Jinbao, Premier of the People's Republic of China
Hank Paulson, US Treasury Secretary
Hu: Welcome, Secretary Paulson, to Beijing for our end of year strategic economic dialogue.
Hank: Thank you, Mr. President.
Wen: We know you have a lot on your plate at the moment.
Hank: Yes, these dumplings are delicious! (Eats three dumplings noisily.)
Hu: So what would you like to talk about first? How many Treasuries we're going to be buying over the next few years?
Hank: No, why don't you start by telling me when you're going to allow the renminbi to appreciate against against the dollar.
Wen: I'm sorry, I can't tell you that.
Hank: Who is going to then?
Hu: Not necessarily. No decision has been taken.
Hank: Excuse me?
Hu: We have not reached a decision yet.
Hank: But Mr. President, when will that happen?
Hu: I am the president, and it will happen when I decide it will.
Hank: I was speaking to you sir. But can you tell me when?
Wen: No, you need to ask Hu.
Hank: But the president already told me it was his decision. I need to know when!
Wen: Really, sir. The president is sitting right here. Why ask me when you can ask him?
Hank: I did ask him. Who asked you to pipe up, Mr. Premier?
Hu: No I didn't.
Hank: Excuse me?
Wen: Listen, Mr. Secretary. The renminbi has appreciated sharply against other currencies in the last few months. Who knows when it will start appreciating against the dollar again?
Hank: That's why I'm asking him! Mr. President, will you let USD/RMB fall any time soon?
Hu: When the time is ripe for the renminbi to strengthen.
Hank: Thank you for your help and understanding, Mr. President! (Pulls out iphone surreptitiously.) Hey George, I think the Chinese are finally ready to play ball on the currency, so that's one less thing we have to worry about.
(Hu and Wen exchange glances and snigger behind their hands.)
There's nothing wrong with a bit of vintage Abbot and Costello on unenjoyment day. At this point, there's not much more to say about the data itself; Macro Man retains the view that the data will be crap, but perhaps not as crap as priced. Sadly, no obvious trade has surfaced on that front, though he likes selling the front end of Europe after comments from Mersch suggesting that further ECB cuts will be even more grudging than those already observed.
That Ben Bernanake now seems intent on not only putting conditions in place for an eventual recovery, but also to put an immediate floor under house prices is a worrisome development, but frankly Macro Man is too tired to tackle that one without a weekend's worth of rest.