Beijing Gets the T-Bond Blues
The Washington Post and the New York Times lead on Chinese Premier Wen Jiabao's demand that the Obama administration guarantee the safety of Beijing's trillion-dollar investment in U.S. Treasury bonds. "We have lent a huge amount of money to the U.S.," Wen said. "Of course we are concerned about the safety of our assets." The Obama administration rushed to assure Beijing that its investments were secure; analysts say that any move by China to dump its vast U.S. debt, or even merely to cease purchasing Treasuries, would drive up the cost of U.S. government borrowing and cause a spike in mortgage rates for millions of U.S. homeowners.
The Wall Street Journal tops its world-wide newsbox, at least online, with some rare economic good news: This week was the stock market's best since November, prompting speculation that the economy could finally be close to bottoming out. "There is a real economy out there, and it has a chance of doing better," said one relieved trader. The Los Angeles Times leads on news that a recently adopted plan to fill gaping holes in California's state budget is already seriously out of whack; one analyst says the state is on course for a shortfall of more than $8 billion.
Speaking at a rare meeting with Chinese journalists, Wen said that he was "definitely a little worried" about the security of China's vast holdings of U.S. debt. Economists say his concerns are reasonable: Efforts to boost the U.S. economy by taking on more debt and printing more money could weaken the dollar, diluting the value of Treasury bonds. Still, there's little sign that China will reduce its U.S.-debt investments, or slow its purchase of T-bonds; any sell-off would risk flooding the market, devaluing China's investments still further. Besides, analysts say, a Chinese sell-off would make it far more difficult for the United States to spend its way out of the current recession—and that, in turn, would take a heavy toll on the already-flagging Chinese export market.
Wen's words were widely perceived as economic fighting talk, perhaps aimed at dissuading U.S. policymakers from adopting a "buy American" strategy that could endanger Chinese exports or at heading off U.S. efforts to challenge Beijing on currency issues. Still, reports the WSJ, the Obama camp moved swiftly to assuage Beijing's concerns, with senior economic officials declaring that U.S. bonds were secure and that America's fiscal policies were sound. "There's no safer investment in the world than in the United States," said White House spokesman Robert Gibbs.
The NYT off-leads with word that, in an attempt to signal a break with the Bush years, the Justice Department has declared that it will no longer use the term "enemy combatant" to describe the 241 detainees being held at Guantánamo Bay. But the department also reasserted its right to detain terror suspects without charges and provided a definition of those who could be held that was not substantively different from the framework offered by the Bush administration. Lawyers for the detainees said they didn't expect the revised terminology to help their clients; still, the WSJ notes that the shift in emphasis hints at the Obama administration's likely use of civilian courts, rather than military tribunals, to try those being held at the camp.
In a front-page report, the WSJ finds evidence of lingering tensions between Protestants and Catholics in Northern Ireland, where a policeman and two soldiers were murdered this week. By contrast, the NYT reports that the killings brought the country together in protest; at the police officer's funeral, the priest declared the violence "an attack on the whole population of Northern Ireland".
With the stock market finally having a good week, the administration sounded a cautiously optimistic note about the overall health of the U.S. economy. Obama—who, the Post notes, has lately appeared increasingly eager to blame the financial crisis on his predecessor—declared himself "confident about America," while his chief economic adviser, Lawrence Summers, said there were "modestly encouraging" signs that consumer spending was stabilizing. The Post reports the stock-market rally on the front of its business pages—along with news that to cut costs the paper is to scrap its stand-alone business section and merge business coverage into the main A-section.
All the papers pick over the fallout from the economic crunch. The NYT reports that recessions encourage entrepreneurialism but also that hard times are leading some to delay nonessential medical treatment. The Post reports that the barter economy is booming as companies and consumers struggle to make ends meet; the WSJ notes that analysts are revising their views of the underground economy and now believe that informal trade may help stave off urban decay and unemployment. The Post reports on an airfare war that's making travel remarkably cheap for those who can still afford it; the NYT profiles an airplane repo man, who's earning big bucks repossessing private planes. Even America's landfills are feeling the pinch: Garbage-collection levels have dropped by as much as 30 percent as U.S. consumers buy—and throw away - less stuff.
Jim Cramer got roasted this week by Daily Show host Jon Stewart for failing to warn the public about the impending financial crisis; the Post writes enviously of Stewart's ability to puncture "the balloons of the powerful with a caustic candor that reporters cannot muster." The NYT compares the episode—apparently favorably—to a Senate hearing: "Mr. Stewart treated his guest like a C.E.O. subpoenaed to testify before Congress: his point was not to hear Mr. Cramer out, but to act out a cathartic ritual of indignation and castigation."
And finally, bad news for mosquitoes: The WSJ reports that rocket scientists are building Star Wars-style smart lasers capable of recognizing the blood-sucking bugs and shooting them out of the air. The aim is to use the death-rays—perhaps mounted on unmanned drones—to keep mosquito populations at bay and help prevent the spread of malaria. "You could kill billions of mosquitoes a night," says one excited researcher. "Slay them all!"
Ben Whitford writes for the Guardian, Mother Jones and Newsweek.