07 August 2007

China set to cash in its chips

Shit, meet Fan. As in He Fan, an official in the Chinese government who promises that China can sink the U.S. dollar if it feels like it.

The Telegraph is reporting that China "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."

China's state media is referring to the tactic as the "nuclear option," writes Ambrose Evans-Pritchard.

"[S]uch action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels," the article continues. "It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds."

Yes, you read it right, that's $900,000,000,000. A fly dick short of a trillion bucks.

Mr. Fan told China Daily that the Chinese central bank, in the event that the yuan rises dramatically as a result of sanctions, "will be forced to sell dollars ... which might lead to a mass depreciation of the dollar."

China has been cleverly building to this point for quite some time, egging on the steady implosion of the US economy with cheap products, cheap labor and cheap lies.

Meanwhile, blissfully unaware, financially struggling Americans seal the deal further each day by continuing to flock to China slut Wal-Mart and basically every corporate chain across the country. Hey, like a dealer to a junkie quivering for a fix, they're only giving us what we want, so you can't blame big business.

But I'm sure President Bush and the Republicans will do everything in their power to stop China from pulling the plug on us. Like a good old-fashioned diversionary war with Iran, or peachy economic lies from grinning fools on Fox, or, as is the custom, blaming it all on a Clinton. Just keep eating your fish sticks, America.


Marc McDonald said...

Hi Guzman, nice job with your blog. I run a progressive blog myself and I was wondering if you'd like to swap links.
I have you linked in the left column of my blog: http://www.beggarscanbechoosers.com
If you could give me a link in your links section, I'd sure appreciate it!

Marc McDonald

Guzmán said...

Thanks, Marc. You're linked.

Skeptic8 said...

Somebody noticed! I wonder when the WaPo will catch up with you. I expect that Rupert's Wall St Jrnl will have to sit on this one for a while. The Chinese Slave Plantation isn't buyin' the paper for Georgie's Arabian Adventure without a plan. Labor has suffered greatly. I wonder what the Chinese stock portfolio looks like. They control our currency and can't resist a "deal".
Skeptic8, Austin TX

Anonymous said...

I think the current WalMart commercials are really on target:

First, instead of suggesting people trade in their SUV for a sane car, they have some actors do snotty hyperbole,

"With the price of gas, what am I supposed to do, ride a skateboard?"

Then, the zinger:

"With the cost of some things these days, I _HAVE_ to shop at WalMart."

Brilliant. Like our "No Plan B" president that they thought was so smart back in, oh, 2001 that commercial hits Mr. and Mrs. White Bread right in their mindset. I'm sure people will happily continue flocking to WalMart without understanding that WalMart is one reason they can only afford to shop _at_ Walmart.

I understand France enacted legislation regulating hypermarche. But then they are apparently a somewhat saner society.

Marc McDonald said...

Hi Guzman,
Thanks a bunch for linking me.
Re: this article: nice job.
And let's not forget Japan, which also holds around a trillion dollars in U.S. debt.

In fact, I believe Japan holds more leverage over the U.S. economy than China. After all, the low-end manufacturing that China specializes in can be done in any one of a number of low-wage Third World nations.

On the other hand, the U.S. economy has become highly dependent on extremely high-tech, sophisticated components that only Japan is capable of manufacturing.

A good example of this are the ultra-high-tech carbon fiber wings for the Boeing 787, which Boeing has outsourced to Japan (despite the fact that Japanese workers earn on average 30 percent higher wages than American workers).

Whatever happened to corporate America's old excuse that they were doing outsourcing because workers overseas made less than their American counterparts?

As it turns out, the world is much more complex than "globalization" advocates like Thomas Friedman, with their simplistic economic theories, even imagined.

Marc McDonald

Anonymous said...

Most of you younger people seem to get the drift regarding the state we are in. But take note of what my father told me -"never become a target "they" look for them first!"

Do as my poor fisherman friend in another country does - he told me his $1 Chinese sharpening stone wears out three times as fast as the one's he used to buy made in USA. So He now pays the higher price for a US item when he can find them. That is the clue -start small businesses over the I-net and sell USA made, not the bullshit of assembled in USA.

A small move - but dikes come down with a small hole initially.

René O'Deay said...

Even chinese lighters don't work more than half the time.

You get what you 'pay' for.

Outsourcing has only led to educating these 'third world' countries.

And they have enormously more top students coming on now than all the students in North America.