US/China agreement translation in plain speak..
China: "You can bring your capital in, but we don't wish to be a subsidiary of the USA, we still wish to have some financial independence".
USA: "You need to grow, capital needs exist and our Congress does not appreciate you blocking USA business interests from entering your emerging markets."
China: "This is true, but, we have strongly supported the US dollar , in fact, we hold more US dollars in our central bank than nearly all other countries combined. This, despite the fact that the dollar has shown continued weakness and may soon not be the lead monetary gauge, did you notice the Japanese decision to play ball with IRAN by utilizing the YEN as opposed to the US dollar in oil related transactions? Shouldn't you be chatting with them instead of us, when we are playing ball here and holding our US dollar positions?"
USA: "Yes, we understand and appreciate you supporting the dollar at this critical point, but, please realize that the US consumer is responsible for nearly 90% of the transactions that have put those US dollars in your coffers. After all, without the US imports from your country, and the outsourcing to your fine people over the last few years, you know that it is true that your gain has been our loss in surplus/deficit trade transactions."
China: Yea, you are right, this really isn't that bad a deal, after all, we have grown so much, we are actually starting to outsource some of the work your fine companies have sent to us, for instance, TO VIETNAM. Tell ya what, lets meet in the middle, let's agree to move it to Autumn 2007 as opposed to our original December pose. This way we meet in the middle and neither side is appearing weak. Hey, don't forget, our folks here are buying more cars and we don't have enough oil, please remember us when you are making arrangements to secure adequate supplies for the US consumer."
USA: Ok, great, lets get our press folks together and prepare remarks to the public, thank you for your time and thoughtful consideration."
Paulson in secure phone call to 43: "Mr. President, we have an agreement in principle with China, China is meeting us in the middle, we know they cannot dump their dollars because that is shooting themselves in the foot, so that will take considerable pressure off that precarious situation, this should help stabilize the dollar globally and in some ways assist the FOMC/FEDRES in their efforts to support the US equity markets. My suggestion would be for the FED to continue to step into the Chicago derivitave arena, support the S&P 500 futures, thereby permitting a slower fall in US equites, perhaps, even a recovery in the mentioned equities if you can get a FED statement that offsets the negative prime lending media frenzy.
43: Very well Mr. Paulson, thank you for your update, I am going back to bed.
The rest is history.
