“The Chinese aren’t taking

[bsrsharma]

“The Chinese aren’t taking any extra default risk buying GNMAs instead of Treasuries. Principal repayment of both is fully guaranteed by the federal government.”

Then why can’t the Treas. Sec. place a few calls to his pals at JPM or Goldman and fix it. After all he is a wall street bigwig himself. Another question is, if the statement is true, why doesn’t the market just take care of it automatically? I am sure Alphonso isn’t passing the hat in China for treasuries yet (I hope)

“I wouldn’t pay attention to his rank… The Chinese know he’s just the delivery man.”

If it is minor issue, why need a delivery man? Standard tools of international diplomacy (financial attache at embassy etc. http://www.ustreas.gov/press/releases/js2961.htm

) should have sufficed.

“I think this is just one more piece of a multi-pronged effort to prop up house prices”

Isn’t GNMA mostly for FHA/VA housing? They are mostly smaller loans and shouldn’t upset the apple cart too much.