Had Geithner studied Mandarin, he might have written something like “the venerated Han people and their munificent leaders are traveling the stable path of well-precedented alterations to harmonious rates of exchange with supplicant foreign powers. Long live Chairman Ma0.”

Instead, he went with the old 货币操纵 – is China’s currency regime seriously news to anyone? Much has been made of Geithner’s candor as more significant than the content: it signals a harder line on China from the new administration. Or maybe,  as Felix Salmon notes, it’s part of the Treasury’s new plan to “prevent a bubble in government debt.” Either way, the reaction seems overblown, and stands only as an indicator of continued schizophrenia. 

The world has much more to worry about a general Chinese collapse than the People’s Bank dumping its dollars. Michael Pettis (of China Financial Blog) seems to be on to something – hot money flowing rapidly out of China, despite official reports of credit expansion. He suggests that an increase in RMB denominated loans from official banks might simply be short-term expense coverage. Of course this is all anecdotal, and comes from reading fewer stories about usurious loans. If any of it is true though, things could get very ugly.