Are the Chinese dumping the dollar?

this was posted at the agonist. i am going to link the two articles below. if you have further thoughts or information, please share.

the articles are here:

first article

and the second

the second

if this is true, we could be in for a hell of a ride the next few months.

does this explain why the shrub decided to go to the olympics???

your thoughts comments and addtional links...

•  tips flames whatever

  by johnfire on Thu Sep 06, 2007 at 08:55:03 PM PDT

  •  Look, it's already started. It's clear.

    Chinese have been out buying "hard assets," using dollars to buy factories, resources, etc.  They don't want dollars.

    We will see the dollar replaced as the global currency in the coming years.

    The scary thing is that since we went off the gold standard in the early '70s (due to the debt from the Vietnam war) all currencies are pegged to the dollar, and the dollar is pegged to the health of the U.S. economy.  As our deficit increases, the value of our currency declines.

    It's very circular.  This is why gold and other hard assets are so valued today.  The U.S. dollar is "totally relative" in value.

    Chinese got stuck in a pattern of buying U.S. debt, and then having nothing to spend it on except more U.S. debt - they couldn't do anything with their holdings in dollars.  Now they're getting smarter.

    Strangely, U.S. Treasury Secretary Paulson (so-called believer in a "strong dollar" - complete horsesh*t) has played into this by demanding that the Chinese increase the value of their currency.  This reduces the value of the U.S. currency.

    The U.S. Treasury & Bush together have made a fine mess of things.

    The American people have been lucky that the dollar was the world currency, and we have lived high on the hog for decades, based on this.

    The plug has been pulled out of the bathtub, and there is a downward spiral - inevitable.

    The huge military deficit has a lot to do with the crisis that we face, and most of us have no awareness of the sh*t that is in the process of hitting the fan.  

    by enthusiast on Thu Sep 06, 2007 at 11:11:01 PM PDT

•  Since I was just about to post this

  I'll add some of the story here, instead:

  A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.

  China threatens `nuclear option' of dollar sales
  Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone.

  "We won't know if China is behind this until the Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the US. They don't seem to be switching into other currencies, so it is possible they are moving into gold instead. Gold is now gaining momentum across all currencies and has broken through resistance at 500 euros," he said.

  While the greenback has been resilient over recent weeks - even regaining something of a 'safe-haven' role as banks scrambled to buy the currency to cover dollar debts - most experts believe that America's $850bn current account deficit will eventually cause the dollar to resume its relentless slide.

  David Powell, an economist at IDEAglobal in New York, pointed the finger at Beijing as the main suspect in the sudden bond flight this summer.

  In a client note entitled "Has China started to dump US Treasuries?", he said the sales appear to coincide with early moves by Beijing to launch its new $300bn sovereign wealth fund.

  Any evidence that China was pulling out would risk setting off an unstoppable stampede, which is why such a policy would never be announced. It holds the world's biggest pool of resrves, followed by Japan.

  You want my opinion?

  Chinese money torture.

  Slow, exorable crash of the USD.

  Watch in in real time. In fact, you can't miss it.

  by Pluto on Thu Sep 06, 2007 at 09:01:50 PM PDT

  •  if its even suspected

    it will cause a stampede.

    panic, is where everyone dumps at the same time.

    question is will gold, or something else hold value....

    by johnfire on Thu Sep 06, 2007 at 09:06:48 PM PDT

    •  God God, Yes.

      Buy gold.

      I'm going to publish a diary soon of where and how to do this (my picks).

      by Pluto on Thu Sep 06, 2007 at 09:17:21 PM PDT

      •  better yet switch to swiss franks and deposit in

        a swiss cantanel bank.

        Zurich being the oldest and largest which is backed up by the entire zurich cantanel (think county)

        Old old old old bank that has survived depressions, world wars, etc.

        The swiss frank will always remain stable due to it being the safest, neutral, oldest banking system that everyone and their mother relies on in the world.

        1 prob, you can only open an account in person over in zurich. Find a cheap plane ticket on the internet , fly over, open account, electronicaly move everything over there and switched into swiss franks.  When you need funds then electronicaly transfer back here to your local US bank switched over to dollar (swallow small fees for money conversion= worth it for stability)

        :-)

        by jimmyboyo on Thu Sep 06, 2007 at 09:29:16 PM PDT

        •  You're right about that

          I hold all my currency trading accounts (forex) using the CHF (Swiss) as the base currency. It doesn't earn much interest, but it appreciates every month.

          Even as an leveraged option play or ETF, the Swiss Franc is the one to buy now. (The Yen, too.)

          Hell, the dollar is falling against 17 major currencies this year. You could throw and dart and double your money.

          by Pluto on Thu Sep 06, 2007 at 09:39:59 PM PDT

•  Gold will be the only safe haven short term n/t

  by eternallyvigilant on Thu Sep 06, 2007 at 09:13:33 PM PDT

•  Things are so cheap here in China

  We've been living here for two weeks now and this is my first chance to post.

  Examples -

  A box of Sudafed that would cost $4 in the US - less than $1 at the Wal Mart here...and it's even stronger than the US strength med.

  A 30-40 minute cab ride across town during rush hour - $5

  A large pizza and three drinks at Pizza Hut - $6

  Fried chicken meals and drinks for three at KFC- $5

  We can eat for half the price if we go native, of course. Hubby and son are doing that, but I'm not.

  The people here are incredibly friendly and welcoming. I'm looking forward to coming home though, because I'm a bit too used to the luxuries of the US. Call me a capitalist pig!

  by Sharon Jumper on Thu Sep 06, 2007 at 09:22:47 PM PDT

  •  You're in china and your eating at KFC?!

    You are missing out on some great food.

    by Dr Colossus on Thu Sep 06, 2007 at 10:22:45 PM PDT

    •  Not missing a thing...

      I eat like a 4 year old even when I'm at home...chicken, fries, burgers, pizza...no veggies.

      For the record, my husband has been very disappointed in the food here - he was really looking forward to it. His decriptions of things he's eaten here have varied from "soup that tastes like dirty acquarium water" to "the grissly, fatty parts of meat we normally cut off and throw away."

      Our 16 year old son is loving life, though. My female undergraduate students are tutoring him in Chinese and taking him out to sightsee everyday. Since both my husband and I are teaching at the university, we were given two apartments, so we live in one and our son lives in the other.

      I'm counting the days til the "National Holiday" October 1-7, which celebrates the October 1949 Revolution. We're bugging out of here and going to Shanghai to lay up at a five-star hotel for the week. It will be nice to sleep in a real bed, not the "box springs" that the Chinese use as a mattress that we have in our apartment.

      by Sharon Jumper on Thu Sep 06, 2007 at 10:37:32 PM PDT

      •  Enjoy it while you can!

        Unfortuneately, the water might have been from the aquarium or some other polluted source. I've heard it's common to find brown tap water there.

        The exchange rate is making it inexpensive for you. Meanwhile, the dollar has fallen in value compared to the rest of the 1st world-- the pound, the euro, and the canadian dollar. American dollar used to be $1.50 to the Canadian dollar, now it's about 1 to 1.

        by doinaheckuvanutjob on Fri Sep 07, 2007 at 12:00:38 AM PDT

  •  I'm moving to china in a couple of weeks

    Just wondering if you have any advice...totally OT.

    by Meandering Fox on Fri Sep 07, 2007 at 09:44:42 PM PDT

•  I really doubt it...

  ...the bulk of China's economic fortune is from exports to the United States.  If they crash the dollar, their biggest market evaporates.

  by Jay Elias on Thu Sep 06, 2007 at 09:28:32 PM PDT

  •  Jay but their venture into capitalism is only

    play

    a toe dipped in a puddle

    Economic destruction is a most honorable and one of the oldest forms of warfare practiced by the chinese.

    by jimmyboyo on Thu Sep 06, 2007 at 09:31:04 PM PDT

    •  Well...

      ...it is a formula for disaster, and possibly world war.  If someone was to sink the US economy, it would bring down the global economy.

      So, if they are doing it, then they are truly crazy.

      by Jay Elias on Thu Sep 06, 2007 at 09:33:47 PM PDT

      •  I don't think so

        remember they were playing death by politics and a smile while dressed in silks when europeans were picking lice off of each others' backs

        If they are doing/ will do it (I have no clue) then bet your bottom dollar they know every angle and are prepared for whatever reprucsions.  Prepared to come out on top.

        by jimmyboyo on Thu Sep 06, 2007 at 09:40:01 PM PDT

        •  Well...

          ...again, I'm not suggesting they aren't playing "death by politics", but despite the length of time they have been at it, China has made quite a few massive errors in judgment in their past.

          Just because you are prepared for a world war (see Germany, WWI and WWII or Japan, WWII) doesn't mean you'll win it.

          by Jay Elias on Thu Sep 06, 2007 at 09:45:21 PM PDT

        •  Yeah! What He Said.

          jimmyboyo -- You really do get the Chinese. You must be a pro.

          People always forget that the Yuan is pegged to the dollar and they're about to let it float. It's the prefect way to conquer America. AND, it cost less to destroy the US than it costs the US to kill our own military in Iraq.

          Someone has to destroy America. It's a rogue nation invading other countries and killing their citizens.

          by Pluto on Thu Sep 06, 2007 at 09:46:47 PM PDT

          •  I like your sig line, Pluto

            I have used it many times when debating wingers about Hitler etc.  They like to say that the nazis were socialists.  yeah, whoever expects a winger to make sense is in need of a straightjacket.

            Anyway; I have used that Mussolini quote often.

            ^5

            by jimmyboyo on Thu Sep 06, 2007 at 10:01:14 PM PDT

      •  hey jay

        ron paul is coming personally to our meet up group here in Manhattan.

        email me, you should come meet him in person.

        by pinche tejano on Thu Sep 06, 2007 at 10:09:12 PM PDT

    •  If you don't mind, please enlighten me...

      Economic destruction is a most honorable and one of the oldest forms of warfare practiced by the chinese.

      Are there some examples of active economic destruction that I should know about or are you speaking in general, they have the lowest-wages in-the-world/semi-closed market terms?

      by YoyogiBear on Fri Sep 07, 2007 at 02:19:39 AM PDT

      •  He Was Speaking of Sun Tzu

        The Art of War.

        The object of the game is to win the war without coming to a single blow.

        Chinese imperialism, historically, has only been economic. Aside from skirmishes with neighbors -- the Chinese do not invade nations with war machines.

        They had an entire navy before the Europeans knew how to build a canoe. They decided to scrap it and isolate themselves in the "Middle Kingdom." They believed that eventually the world would come to them.

        by Pluto on Fri Sep 07, 2007 at 10:40:06 AM PDT

  •  Interesting thought - but the US is

    currently on a $15-20B/mth run rate to keep china from buying their way into the ME.  You should go back and read the underlining concepts that lead Addington & Yoo's (two of the greatest batshit fucking neocon wingnuts ... ever) ME intervention strategy.  It's all about oil and China.

    by BigiMac on Thu Sep 06, 2007 at 09:42:39 PM PDT

  •  Well yes

    But it is not the only market.  Three hundred million people would be a lot less than 50%.

    Given the american economy out of the way, Chiba could do a number of things.

    1. The price of oil would likely drop for everyone else but effectively go further up in the US.
    2. Raise the price of the goods they sell by enough of a  percentage to offset the loss of sales to the US.
    3. Decrease its production and start dealing with some of its pollution problems.
    4. Nation building in the Middle East, South America and maybe even parts of Asia.

    That "trillion" becoming wastepaper is not likely to hurt them.

    And that doesn't even cover the fact that if the US dollar collapses then you will not be able to afford any but the cheapest goods.  And who makes those?

    by Demena on Thu Sep 06, 2007 at 10:16:14 PM PDT

    •  We're the ones who buy the most stuff...

      ...yes, we're only 300 million, but we're big spenders.

      Your #2 is impossible; take the US out of the global economy and everything is more expensive for everyone everywhere, and everyone everywhere makes less money.

      If someone intentionally spikes the dollar, it will collapse the world economy.  Think the Great Depression (which was throughout Europe as well), but brought everywhere.

      Finally, you're forgetting that the US has a big way to stop this from happening.  The US simply declares war on China and nationalizes Chinese-held treasury holdings.  Uses all those bombs and bombers we've bought with the Chinese-lent funds to take out their manufacturing capability.  If this was an intentional spiking of the value of the dollar, that would be an act of war by international convention.

      by Jay Elias on Thu Sep 06, 2007 at 10:44:57 PM PDT

      •  Uh, I don't think we'll be declaring war on nuke

        holding countries like China. Heck, even the Neocons didn't attack North Korea though some wanted to.

        Mutual Assured Destruction isn't just a theory, it makes even dumb world leaders think twice long and hard before ending their lives and country as we know it.

        by doinaheckuvanutjob on Fri Sep 07, 2007 at 12:05:48 AM PDT

        •  Yeah...

          ...we're much more likely to meekly accept our economic destruction.

          by Jay Elias on Fri Sep 07, 2007 at 12:07:47 AM PDT

          •  Yeah, that's a good question. Which way would

            that play.

            The thing is, who would such an economic collapse really hurt? The ultra rich? If they don't get that much of a pinch, they'll choose collapse over war, if not, perhaps war as you describe or in some other (perhaps surrogate manner, such as provocation with Taiwan for example).

            by doinaheckuvanutjob on Fri Sep 07, 2007 at 12:09:46 AM PDT

            •  It would hurt everyone, everywhere. A lot.

              The US is the single biggest player in the world economy.  If you simply tank it, make its money worthless, then you'll take down the whole house of cards.

              People everywhere buy or receive American goods.  Many nations depend on our aid.  Many nations have us as the biggest market for their exports.

              To "dump the dollar" as an attack on the US economy would require doing it hard and fast, to negate the corresponding damage of American counteraction.  So, you're talking about creating a massive, rapid devaluation of the dollar to disaster circumstances.  And then the economy of nearly every nation goes haywire.

              by Jay Elias on Fri Sep 07, 2007 at 12:42:04 AM PDT

      •  Uh...

        1. You are not the only big spenders
        2. Take the US out of the economy and gas drop significantly
        3. Take the US out of the economy and it doesn't bear the weight of the petro-dollar

        By no means impossible.

        If someone intentionally spikes the dollar, it will collapse the world economy.  Think the Great Depression (which was throughout Europe as well), but brought everywhere.

        So I thought but now I think the rest of the world might co-operate with each other enough to prevent it.

        Finally, you're forgetting that the US has a big way to stop this from happening.  The US simply declares war on China and nationalizes Chinese-held treasury holdings.  Uses all those bombs and bombers we've bought with the Chinese-lent funds to take out their manufacturing capability.  If this was an intentional spiking of the value of the dollar, that would be an act of war by international convention.

        Not a very progressive attitude.  If indeed, the US is that recalcitrant then perhaps it will bear the consequences.  The world might suffer badly but the USA would be exterminated.

        by Demena on Fri Sep 07, 2007 at 12:45:52 AM PDT

        •  Well, that's great....

          ...as long as we understand that the consequences would be that the world has to exterminate the US at the cost of a couple billion people that we will kill, this plan sounds great!

          I'm not recommending the U.S. declares war on China, of course.  But I'm not an idiot.  You expect people to take kindly to an act to cause an economic disaster which would cause millions of Americans to literally starve to death?

          A deliberate act to cause the rapid devaluation of the dollar as an economic attack would be no less effective a means of committing mass murder of Americans than with a nuclear attack.  Not the sort of thing done wisely to people who have the biggest stockpile of nuclear weapons in the world.

          by Jay Elias on Fri Sep 07, 2007 at 12:54:06 AM PDT

          •  Umm...

            What happened to not negotiating with terrorists?

            The only thing you can do with terrorists is remove their ability to harm you or to kill them.  If the US wants to put itself in that position and threaten to kill a couple of billion people to get its way then Then by your own doctrines a pre-emptive nuclear strike would be called for.  

            That makes me remakably pacifistic when compared to the US who is willing to do much the same for something that might become a threat.

            Your threats do not scare me Jay and I doubt they will scare the world into inaction.

            And your notion of "deliberate" act is stupid.  Are you saying that a mortgage foreclosure is an act that should be responded to with violence?

            Are you saying that america has the right to decide if people can sell their own property (currency) or not and what price they may charge for it?

            If you think they are charging too little then you buy it.

            Bush has rendered the dollar to a state of worthlessness.  Excuse me if I don't want to buy it.

            Don't blame the rest of the world for your problems - and don't try to threaten it either please.

            by Demena on Fri Sep 07, 2007 at 01:04:08 AM PDT

          •  Oh, another thing...

            You expect people to take kindly to an act to cause an economic disaster which would cause millions of Americans to literally starve to death?

            Well they are sitting by and "taking it kindly" when you do it to Iraq and are proposing to do the same to Iran (and now according to you, China) so, yes, I do expect it.  If you don't want it to happen you should remember the golden rule.

            You have no right to demand charity or threaten violence if you don't get it.

            by Demena on Fri Sep 07, 2007 at 01:08:20 AM PDT

            •  Well....

              ....I'm not demanding a thing.  I'm observing the way things work in the world.

              Are you trying to shock me with the news the world is unfair, and that the US plays the bully yet would claim the high ground if bullied by someone else?  Do you somehow think that I am making threats when I make a reasonable and supportable suggestion of what the United States might do?

              What I am saying in this case about the US is no different than what I would say about a crime lord.  That if you cross him and try to destroy him financially, he will do what he can to destroy you first.  Indeed, he will probably react with irrational levels of violence, to a point where he damages himself greatly through his own actions.

              Of course the US has no right.  Of course, if they wanted to protect themselves against this, they shouldn't have borrowed one trillion dollars from anyone, much less someone who is not an ally.

              What on earth does that have to do with the likely consequences of an intentional destruction of the value of the dollar by China?

              by Jay Elias on Fri Sep 07, 2007 at 02:17:28 AM PDT

              •  It is this simple

                Who decides what constitutes "deliberate" or "intentional".

                The problem always comes down to "who decides".  The US seems to prefer unilateral stances both internationaly, nationaly, intranationaly.  But I begin to observe that it seems a cultural thing.  A compromise is seen as a loss, something to hold a grudge about.

                Seeing as this is a dead thread I'll  make a few personal comments if I may.  I think I like you Jay Elias.  We have a number of arguments, some quite bitter IIRC, and I think there are fundamental things in each of us that are a mystery to each other but mostly you make good sense and I enjoy our communications when it does not get too heated.

                I'm an idealist.  That makes me at times unreasonable, confronted with facts or factoids I cannot deny but cannot defend.  You on the otherhand are far more practical.  What confounds me there is that I subscribe to the point of view that we won't get out of this by the same type of thought that got us into it and I am looking for that different type.

                Let us just say that in all solutions I am looking for the ethical one first.  I'll go for the most practical of the ethical solutions rather than the most ethical of the practical solutions.

                by Demena on Fri Sep 07, 2007 at 06:58:01 AM PDT

                •  Eh...

                  ...I never take any of it personally, and I hope you don't either.  It is a tough form of communication, comment threads.  We have all the time in the world to look at everything else the other person said, but we have no natural interplay that makes clear the presence or lack of animosity.

                  I tend to look at things analytically.  Ideology often has little to do with what I say; I see certain probabilities and tend to believe that everything has to be dealt with in those terms.  Which is ironic, in a way, since my personal politics are essentially about if many political realities could be dismissed, what would be the proper policy?

                  That being said, I understand the world in terms of people and entities, including nations, acting realistically.  I can't be much bothered to contemplate issues like the culpability of members of the Bush administration for war crimes; such a thing isn't possible.  

                  It makes me a frustrating foil for others here often, I think.  Particularly regarding international affairs, I conceive of what nations will do regardless of whether or not they are right or wrong to do it.  Because mostly, it is out of our control and influence.  And because the ethical thing is not always the ethical thing.  China should be able to do with their money what they want, after all.  It is theirs.  But, at a certain point, if the balance is between China's rights to do what it wants with its money and the possibility of world war, I am not going to support what China does.

                  But I suppose that it is the vacillation in my own priorities that you, and others, find somewhat troubling.  And I can understand and sympathize with it.  I'm not utterly consistent in how I apply ethics versus practicality.

                  Thank you for the compliment, btw, and likewise.

                  by Jay Elias on Fri Sep 07, 2007 at 09:10:24 AM PDT

•  Slam Dunk!

  Maybe I'm too simple-minded to understand the complexities of international finance. I am an ex truck driver on disability. We, in the USA save nothing. We have learned from our TV sets that we have to buy as much disposable junk as possible. We go into a panic when they recall millions of worthless pieces of molded plastic junk, that nobody needs. We consume 20 percent of the world's annual fossil fuels, but have to borrow to pay for it. We invest more than the rest of the world on military weapons systems, and try to use them to steal the oil reserves of weaker countries. Our corporations are stampeding to invest their tax-free profits anywhere except the USA.
  The Chinese, and every other rational bond holder will do their best to sell as many dollars as possible before the market dives.
  I think that the rest of the world has figured out that they would be better off without US.

  by Challenger on Thu Sep 06, 2007 at 09:50:54 PM PDT

  •  Honey...

    For an ex truck driver, you've got one hell of a grasp of current global economic strategy.

    by Pluto on Thu Sep 06, 2007 at 09:57:25 PM PDT

  •  And the US claims it beat Saddam

    It was Saddam who started the "oil for euros" meme.  It may have saved the Euro way back then.

    Quite possibly history will record that Iraq was a (very) phyrric victory for Saddam.

    by Demena on Thu Sep 06, 2007 at 10:20:50 PM PDT

    •  Cool.

      Not many folks realize that Saddam, in January 2003, exchanged Iraq's dollar reserves into Swiss Francs and actually started selling oil ONLY in Euros -- threatening the existance of the Petrodollar.

      Three months later we invaded.

      It was always about the dollar.

      Two months ago, Iran insisted that Japan could only buy oil for Yen.

      Japan had to dump dollar reserves and begin buying back Yen -- unwinding the carry trade and causing the collapse of the subprime hedge funds.

      We could nuke Iran, but it won't unring that bell. Iran is China's and Russia's chief oil provider.

      It's over.... We're twisting in the wind.

      by Pluto on Thu Sep 06, 2007 at 11:19:16 PM PDT

•  China doesn't want to finance bushwar

  China has been slowly cutting back on buying US paper, wants to be paid for its goods, has tried to invest in US corporations but the US is picky about what it lets them invest in. The imbalance of trade is severe. The US still builds airplanes that China and other countries want but the main thing the US exports these days aside from software and movies, is arms and fighter jets and nuclear stuff for India.

  It makes financial sense for other countries to invest in the Euro and other currencies because nothing backs up US paper and we're not exporting much of what other people want, except war and war products.

  So, instead of pointing fingers at China, the US needs to look at its own economy and choose life instead of arming both sides of every war.

  
  

  by skywriter on Thu Sep 06, 2007 at 10:24:55 PM PDT

•  If Americans saved their money

  and invested in our own treasury bonds (or if they brought back the good rates on savings bonds) it wouldn't matter what China does with their money.  Bush got China to finance our wars.  China seemed to think we'd want to buy stuff made there even if it has poison in it or is made with lead paint.  If we're not buying their stuff, they aren't putting their money in T-bills.  In the end, it's our own fault being seduced by their cheap slave labor products with the bulk of the profit going to American middle men.  Time we sucked it up and learned to live within our means.  

  by ljm on Thu Sep 06, 2007 at 10:26:01 PM PDT

  •  Our entire economy is based on everyone in debt.

    If Americans stop spending, the hold house of cards will come crashing down.

    Of course, it's going to crash eventually, anyways.

    We have no idea how bad it's going to be.

    Remember the grasshopper and the ants?

    Well....we aint' the ants, and winter is coming.

    by enthusiast on Thu Sep 06, 2007 at 11:13:15 PM PDT

•  The question was,

  "Are the Chinese dumping the dollar?"

  Answer = No.  They can't.  Even if they wanted to, they have very few options in the financial Russian Roulette that's being played right now.

  Remember, about 2 weeks ago?  China came out, really angry.  They were complaining about trade sanctions and what-not.  The real issue is about currency.  They have VAST holdings of dollars.  The Fed has decided to stop publishing its supply of the dollars, the M3.  No one really knows how much money they're printing, but I have a hunch China knows since they're upset.

  A Great, Big game of chicken.
  Let's say China decides to dump the dollar.  They're disgusted with us, they've had it with Bush and in particular they're dumping us because we're bleeding to death financially in that Sink Hole called Iraq.

  What will happen?  The dollar plunges.  It creates a worldwide panic, and could lead to a run on the banks.  China, which previously had world's largest holdings of the dollar, now has nothing.  It becomes a game of Dare, or Chicken.  Bush is DARING the Chinese to dump our currency, because it will destroy them as much as it would us.

  China knows damn well we can never repay the debt we owe them. But there's nothing they can do about it.  

  Because like it or not, we're all on this planet together.  When you're too big to fall, you get to stay!

  by Cliss on Thu Sep 06, 2007 at 11:03:57 PM PDT

  •  Not a Pretty Picture

    Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone.

    I have reason to believe (as a currency, gold, oil trader) that the rest of the nations on this planet are cooperating with China and they are all absorbing some of the financial pain in order to castrate our rogue nation.

    It's a slow motion train crash that's already begun. By this time next year, millions of American families will be homeless.

    by Pluto on Thu Sep 06, 2007 at 11:31:05 PM PDT

•  There seemed to be...

  a lot of what ifs and hand wringing in those articles.  China dumping the dollar is only one theory they had as to why this:

  A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable. . . .

  is happening.  I would definitely entertain a few other reasons before I could make a judgment.

  by o really on Fri Sep 07, 2007 at 03:33:12 AM PDT

•  Chinese buying up American land & companies

  I work on the task force for a state governement group in the southeast. The task force was formed to handle the numerous inquiries and (ultimate deals in some cases) from Chinese companies (many with Chinese government ownership) about how to buy companies here.

  Another state has a fully staffed "China Center" devoted to attracting to such investment.

  They're using a lot of dollars to buy assets here. Think IBM, now Lenovo, and the $3 billion investment in Blackstone Group. Like one banker told me, $3 billion is practically a rounding error to the Chinese.  

  by redding888 on Fri Sep 07, 2007 at 04:53:14 AM PDT