China, the country, not the wrestler, or the porn star, has us by the short hairs. See, they hold some $900b dollars in US debt, and enough hard currency to devalue our money to the level of the peso. That is, if they wanted to.
Well, if we don’t stop threatening their way of life…”selling us stuff”, by arguing for protections in the workplace, and trying to save American jobs, and arguing for a currency that lives on the free market, like ours does, they just might.
The UK Telegraph reports that the “nuclear” attack that so many of us have grown up in fear of, may just be around the corner. Not a bomb per se, a financial nuclear attack.
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.
Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
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.
Our trade deficit with China has nearly tripled since 2001 from $83b to $232b/yr. Total trade deficit since 2001, $1T. China is the second largest holder of US debt behind Japan.
This is the real deal folks. This is the equivalent of teetering on the brink of foreclosure.
24% of the American people see China as an economic threat according to a recent poll. Count me as one of them…a threat of our own making.
Magic word: sustainability – as in, we can’t sustain this any more.