Dollar is getting slaughtered.

I'm sure it was since they keep queuing up for more U.S. Treasury paper.

 

Exerpt from the Gartman Letter‏


THE DOLLAR’S PROBLEM IS THAT THEY LAUGHED AT MR. GEITHNER earlier this week when he was in China to “explain” the Obama Administration’s position on the US long term debt position; on the Administration’s current position on taxes and the economy; on the ability of this Administration to secure China’s investments in US Treasury securities, et al. “Little Timmy,” as we have sadly come to refer to the Treasury Secretary here at TGL, was laughed at by those attending the Treasury Secretary’s very public meeting at Peking University when he was asked if China’s interests were being protected and if China’s investments were safe. He said “Chinese assets are very safe,” and immediately thereafter the audience laughed. The difficult notion for those of us in the US to understand is that the American press did not cover the laughter. Other than for a very cursory, one sentence, statement by The NY Times, that Mr. Geithner’s comments “elicit[ed] some laughter,” little was made of the inordinately poor reception Mr. Geithner received there in Beijing. However, the international media was and is having a field day with the response he was given. The Financial Times earlier this week said that
In response to a question after his speech, Mr. Geithner told the student audience that ‘Chinese assets are very safe,’
drawing loud laughter from his student audience—a reflection of skepticism among many Chinese about the wisdom of building
up large foreign reserves.
The Telegraph in London was even more severe when it said, tersely, that
“US Treasury Secretary Tim Geithner was laughed at by an audience of Chinese students after insisting that China’s US assets are
safe…. The comment provoked loud laughter from the audience…”
But the US media avoided any reporting of the laughter that greeted Mr. Geithner’s speech. None of the US television stories reported laughter; none of the US newspapers reported the laughter; none of the US magazines covering the trip reported the laughter… but the laughter was loud; it was palpable and it was very, very real. Simply put, the US fiscal circumstance has become a laughingstock, and we do not say that lightly. It is, however, true.
The utter and harsh reality of the US present fiscal circumstance is that the world is laughing at the Obama Administration’s handling of it. Mr. Geithner isthe global vicar of the US fiscal policy, and never, ever in our lifetime have we seen or heard of a US Treasury Secretary being laughed at… until now. It is one thing to be derided; it is entirely another to be laughed at, and the US is now being laughed at.
The laughter, we are certain, did not come easily, for the world wanted the Obama Administration to succeed. After eight years of the Bush Administration which the world, for any number of reasons… few of which we agree with… took issue with the US, the world wanted Obama’s government to succeed and take the lead on global economic and political issues. It was prepared to give this Administration the benefit of the doubt on almost any issue; indeed, it was prepared to give this Administration the benefit of many doubts before losing its faith. That faith is now gone. Audiences do not laugh at Treasury Secretaries readily nor easily. They are laughing readily and uneasily at the Obama Administration now, and we cannot imagine anything sadder and more disconcerting than this.
What is even sadder, however, is that the American press missed the importance of this incident completely. As noted, other than the initial one sentence comment that was cursory in nature by The NY Times, nowhere else was this laughter noted by the domestic press. The American media is, and continues to be, “in the bag” for the Obama Administration. The American media reported only that the Treasury Secretary made his case; explained the Administration’s position; informed China of the safety of its investments in US Treasury securities and moved on to his next meetings with China’s President and Prime Minister. As far as the US media was concerned, Mr. Geithner’s speech was a rousing success when instead it was a laughable and utter failure. The American media hid the importance of what happened there in Beijing from the American people, and we believe the media did so cognisant of what it was not reporting… a sin of omission rather than of commission, but a sin nonetheless.
And so, the US dollar is under assault. It is falling relative to every currency in our matrix of prices, save for the Chinese Renminbi, and it is rising against the Renminbi because the world now fears that China will not only allow its current “crop” of US Treasury securities to simply run-off via maturation but that China will sell Treasuries outright, invest elsewhere, but will have to sell the US dollar’s it receives for those Treasury securities, swap them into Renminbi, and then sell Renminbi and buy other currencies for investments made elsewhere. China’s Renminbi is therefore tied to the US dollar’s prospects for the foreseeable future, falling relative to the non-US dollar; falling relative to Sterling; falling relative to the EUR, and falling… embarrassingly… relative to even the Russian Ruble.