Last week’s visit by Tim Geithner, US Treasury secretary, to Jeddah and Abu Dhabi highlighted the importance of Arab Gulf countries to the United States. The six countries of the Gulf Co-operation Council have come to rival China when it comes to financing the US current account deficit.
However, this year two changes to the status quo have emerged: first, Gulf countries are likely to have much reduced surpluses and less money to spend; and second, by dint of printing money, the Fed has emerged as a third major customer for US securities alongside oil exporters and Asian manufacturers.
This policy of quantitative easing has raised concerns on the part of US creditors about the quality of their assets.
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