The U.S. (has urged) China's central bank to buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world's largest economy eroded demand for such instruments.
“It’s not a matter whether they’re going to do more business in mortgage-backed securities, it’s who they’re going to business with,'” U.S. Department of Housing and Urban Development Secretary Alphonso Jackson told reporters in Beijing. He met with central bank Governor Zhou Xiaochuan and Minister of Construction Wang Guangtao.
The U.S. housing regulator is seeking to tap China’s $1.33 trillion of foreign-currency reserves after surging defaults on subprime mortgages caused the near-collapse last month of two hedge funds run by Bear Stearns Cos.
Fact is that Beijing is smarter than this and isn’t going to pound money down a rat-hole unless it’s last-ditch necessary to do so to prop up its other U.S. investments or consumer purchasing power to buy Made in China goods.
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