August 08, 2007

China Threatens U.S.

Amid all the recalls for defective and dangerous Chinese products coming into the U.S and the U.S. trying to enforce trade sanctions the Chinese have said it will liquidate all it's U.S. Treasury Bonds. This move would almost certainly push the U.S. into a recession.

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 Treasury bonds if Washington imposes trade sanctions to force a yuan revaluation.

Two Chinese officials at leading Communist Party bodies have given interviews in recent days warning, for the first time, that Beijing may use its $1,330bn ( pounds 658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

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 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.

To me this is a threat to do harm to the U.S. and equal to declaring war or attacking the U.S. outright. One might think Iran is a huge threat to the U.S. but China is quickly coming into the picture as the U.S.'s number one enemy.

Posted by Quality Weenie at August 8, 2007 08:14 AM | TrackBack

Yep. They threaten our food, our financial system AND our economy; every dadgum thing I picked up at Hallmark yesterday was made in China.
How the heck did we get to this point?

Posted by: pam at August 8, 2007 02:24 PM

Uhhh...Houston, we have a problem....

Posted by: jimmyb at August 8, 2007 08:30 PM