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Random Quote: If you are looking down at the grass it is a good day. If you are looking up at it something went very wrong!
Everyone holding Treasuries is worried about their investment, not just China. Some financial doom and gloom types think bonds, corporate and govt, are the bubble that will be fatal when it pops.
The market quit demanding PMI. To keep up, Fannie and Freddie went along. You can blame a lot (but not all) of the housing industry problems on these actions (in addition to the non-market interest rate loans, the no documentation loans, etc.).
Why do you think Hilary went to China last month befoe the $1.3 Trillion stimulus?
It wasn't just to say "hey". Were I them, I'd be worried too. The worst part, as they buy even more of our debt, they'll have more say so in what we do with our economy.
China is quietly buying up everything they can get their hands on that is traded in currencies OTHER than the dollar. they are in a fragile position of knowing that our currency will soon devalue at an alarming rate and they are the ones holding the biggest bag of dollars at the moment. I was a little suprised that they made that statement, since it is in their interest to prolong the valuation of the greenback for as long as possible.
China is quietly buying up everything they can get their hands on that is traded in currencies OTHER than the dollar. they are in a fragile position of knowing that our currency will soon devalue at an alarming rate and they are the ones holding the biggest bag of dollars at the moment. I was a little suprised that they made that statement, since it is in their interest to prolong the valuation of the greenback for as long as possible.
I don't know if it is China or Japan that holds the biggest bag of US paper. I think Japan has close to an estimated $3-trillion in paper.
Maybe about 3 years ago Russia warned her citizen that were holding USD to exchange them for any other currency because the USD could not survive, would become worthless. India also sold off her USD. Mexico dumped her USD a long time ago. And you are right, the trick is to sell off your USD without devaluing it before its sold.
I'm in China now, have been in and out for the past few years. The Chinese press keeps everybody pretty well informed as to importance of US and China ties. Bush and Paulson did a very good job in that regard although you'd never know it by the US media.
China openly states a strong US T bill system is vital for both sides as China is pushing about $1.8T and Japan about 2/3s that. China is here to stay, amazing things happening and the best bet to keep Obama and ilk looking good. Wen's latest comments in Washington were similarly quoted in Chinese press and on US based websites. No economic propaganda I can see.
An "advantge" China has in worldwide trade over US is they close no economic doors - wheras US does ala Iran, Cuba, Venuzuela etc. China is currently building oil refineries for Venezuela oil as US closes or switches feedstocks for the same.
think about it for a second. China buys our debt so us as consumers can go out and buy tons of there crap. Its a complete house of cards. They have to buy more of our garbage so we can borrow more to buy more of there garbage. Not really a pretty picture. Thats the problem with a fiat currency thats not based on a gold standard. If everyone paid off their credit cards the entire us economy would collapse. We are built on a nation of debt and borrowing. Read the book The Creature From Jyklle Island. Published 20 years ago and saw this stuff coming.
30% tarrif on all Chinese (and the rest of SE asia) goods until they have the same regulatory burdens as the US
Default on their loans
I respectfully disagree. As a free market advocate, I'd propose the less xenophobic approach of eliminating our regulatory burdens so we can effectively compete.
Defaulting on their loans means defaulting on our on T- bills. I don't think that is a good idea, since hyperinflation is but a signature away.
I think hyperinflation is inevitable. The only way to avoid it is a total collapse of the USD, then there is nothing to inflate. Thinking early part of 2010 sounds good.
China Sux 
THT sponsor
Economic problems fixed (mostly) 
