Geithner to Visit China

" Tim -- making his first visit to China this week how the trip and back the dollar US debt. Global economy rob lots as chief investment officer at Cabot money management. Joining us with more rob your read on what he's accomplished at any saying it just seems like he's trying to make nice."

" I think the big message he on a trip for us as investors is. The fact that you pick China to go to first is really a reflection of that these China's power is growing. And this -- great shift of wealth and power from the west to the east going on now. And this is a reflection of that. He needs to have strong ties from a trading standpoint he needs to defend the policies that the government has been putting in place. And and that's not an easy thing to do now because things are pretty -- in Washington."

" He needs he needs to reassure the Chinese too we rely upon and in part to buy our debt that it's a good investment has he done that has he accomplished that."

" Well I'm sure do you know what really goes on -- in the back rooms and you know the speeches. Are going to be generally positive and they're going to be a lot of favorable. Complements to -- side but the reality is. The -- Washington in shock the world. Would this deficit that they're putting out this year. And and this is a problem for them I think interest rates moving up in the last few weeks has really reflection that. Investors now looking at a higher level of of debt for all borrowers in the US and particularly the US government. My expectation is that those interest rates could continue higher. And -- we start to see some reasonable action. Now from Washington about dealing with these deficits and the overwhelming obligations. That they hold for all people in America."

" Not to focus too much on the US because we're here talking about China but do you think that the move up in the yield on the ten year. Does shock those lawmakers and shot the White House into rethinking what they're doing and how much money they're --"

" Well that's possible I think you're really at the ten year at three point seven level it's still relatively low. If you look at the chart over the last twenty years we're in the low air area of the range what I worry about is that there will moving into way higher level there will be in the -- before you know particularly if the economy recovers. And I think this is a challenge for the US government in that huge they have about eleven or twelve trillion dollar debt. When you start talking about interest rates at 5%. Or 6% to finance that you are going to put a huge burden on the US. Annual budget out of Washington. And it means one things for all of us in America. Higher taxes. And that is is scary proposition. And that's why you know there were the reason I'm on I think is to talk about Asia and and China. That's why I take trips to Asia to find great growth companies and countries that aren't behaving the way the US's today. We -- shareholder value was treated well and -- shareholders can grow capital in a very reasonable manner."

" Are you -- and that. Shareholder money and companies get treated better and Communist China than they do here in the United States."

" that's it's an odd situation but. I dig and it's true today it's true when I go visit to China actually went to Vietnam this last trip over -- I visit with the companies and look at there. Obligations that they governments have put on them they're very reasonable very low and these -- companies have very high profit margins a look at it retailers that have 25 with 30% net after tax margins. And the reason is that they. They have a very favorable. Economy from growing capital but the other."

" Now I love me now could you know that it in a government like that the concern I hear from investors this. It could turn on a ban."

" I've been hearing that since my first trip in 2002 to China and I don't believe it. Don't don't not underestimate the Chinese that they know what they're doing they're creating a demand. Market based economy and they are winning and in a very significant way. And and I believe that the issues of the Communist aspect of their government are really mute because. They have their their citizens have economic wealth and you can't have economic wealth without having the other freedoms the other freedoms are going to be given to --"

" Will. Then put together health care package is going to free up money for people to spend and China anyway rob thank you so much for being there both and another they -- Rob -- chicken back announcer at Cabot money management. Well if she did."