After many years of criticising the build up of foreign reserves by Asian countries, who do the Europeans turn to for help bailing them out of their excessive spending and debt accumulation? The Asians of course!!!
Guilt is the attack being taken by Europe (and the IMF) to try and secure cheap loans from Asian reserve managers. Terms like ‘… it is your international obligation …’ are being bandied about. Asia’s Central Bankers and Finance Ministers are panicking – how can they say ‘no’ without generating bad publicity? At a debt symposium this week attended by senior European finance officials (with their bags open seeking contributions), Singapore’s elder statesman Lee Kwan Yew outrightly rejected any obligation on Singapore, claiming that the country’s reserves were not allowed to be invested in lower credits, such as Greek debt. Elsewhere in Asia, Central Bankers are burning the midnight oil to generate reasons supporting the argument that they require the liquidity offered by US Treasuries to avoid contagion. More notably, China has broken its silence to repeatedly argue that Europe must get its ‘… house in order …’, rather than come begging it for money.
The issue will become a focus of the IMF meetings this weekend in Washington. My advice to the Asian representatives is to simply not turn up!