Wednesday, August 08, 2007

This Could Be the Start of Something Big

China, holder of a vast store of US Dollars, has started to rattle our chain. Sale (even partial) of their holdings, mostly in US Treasury Bonds, could trigger a dollar collapse. Now they are hinting they might do just that if we don't behave.

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 9:54am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

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