Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.

Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. "These numbers are absolutely stunning," said Marc Ostwald, an economist at Insinger de Beaufort.

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said. (link)

And of course, there was last Wednesday's announcement which caused the dollar to drop two full cents relative to the CAD.

I don't think anyone wants to create a global financial crisis, but these countries holding dollars are seeing the  value of those holdings plummet in real times. And, the weakness in American financial markets has prompted lower interest rates, creating an additional downward pressure on the dollar. I don't think the dollar can survive much more of this abuse.