When Washington passed out hundreds of billions in bail-out funds in September 2008, it said it could worry about the cause of the meltdown later. This allowed lack of trust in the US financial system to fester.
More recently, the Obama administration turned up the rhetoric against China by saying it believed the country was “manipulating” its currency. The president also wants to see a Chinese stimulus package.
The US needs China to hold the US Treasury and agency debt it owns and, more importantly, to keep buying new US debt. So if Washington wants to ease tensions and keep its borrowing options open, it should look to Wall Street.
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