China threatens 'nuclear option' of dollar sales

China threatens 'nuclear option' of dollar sales

www.telegraph.co.uk

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 of foreign reserves as a political "nuclear" weapon to counter pressure from the US Congress.

(visit the link for the full news article)

[edit on 7-8-2007 by UM_Gazz]

I talked in earlier threads we are on the brink of financial Armageddon...anyone who watches Cramer on Mad Money knows he already thinks were there, and he's well connected on Wall Street. Make no mistake about it, China has the ability to destroy our dollar....They hold TRILLIONS ...how much is our national debt...yeah they have that much control.

www.telegraph.co.uk
(visit the link for the full news article)

[edit on 7-8-2007 by DisabledVet]

[edit on 7-8-2007 by DisabledVet]

Think of it this way, whats the american dollar worth??

Some old jeans and ink...

I guess the Chinese would be about right.

[edit on 8/7/2007 by ThichHeaded]

I too have argued this as the main reason we will not attack Iran. China gets a huge amount of its oil from Iran and they are not about to lose it if they can help it. They don't have to invade like they did in the Korean war; all they have to do is threaten to call in all the notes they hold to bring our economy (and any pending military action) to a screeching halt.

In a lot of ways I say good. Something has to stop this extremely destructive administration from starting yet another war. It would serve them right too for selling us to the Chinese in order to give their massive tax breaks to their already wealthy buddies.

Too bad the average American has to suffer for their greed and folly.

Look at the amount of products with the "Made in China" sticker on them that have been recalled. Toys, foods, tires, what will be the next product to be recalled? China literally has our financial lives in their grasp

You can blame mal-warts and target for that.... in their drive to drive down prices they drive down quality and quality controls as well and we the consumer suffer even as we are urged to buy from them. Well I don't if I can help it.

Glad to see soo many of you so far understand this issue, which the blame is to be laid directly at our congress's feet. This isnt going to go away and if we have to make concessions it's still going to negativ,ley effect the average American.

And further I absolutely agree it's the Wall Marts (LOL at Mal-Warts) and such that further this problem by investing so much of their company not in the American worker, but it the Chinese worker...sad.

So now's about time to look for some Gold....

I was doing some background research for my own post on this topic and got scooped.

I'll throw some of it out there for discussion:

Two days ago the Boston Herald had this to say in an op-ed about the trade dispute and economic cold war going on between China and the US:

China-bashing pointless
China-bashing pointless

Bills are moving in Congress aimed at forcing China to cheapen its currency quickly. They represent bad ideas that could hurt the U.S. economy.

It’s in China’s interest to make its currency more expensive, and it is slowly doing so. Any official U.S. action aimed at producing an acceleration is likely to put the backs of Chinese officials up and could provoke retaliation.

Then we have a US senator (one of those who doesn't seem to have all his marbles) who is visiting China actually threatening them:

U.S. Senator Warns Beijing Over Yuan
U.S. Senator Warns Beijing Over Yuan

BEIJING - Sen. Joe Lieberman told Chinese lawmakers Tuesday a Senate panel measure that could lead to possible sanctions against Beijing should be taken as a warning of America's frustration over the nation's currency valuation.

Now China threatens to retaliate.

Meanwhile, the real money interests are trying to head off an economic meltdown set off by idiotic politicians who don't have a clue:

U.S. senator warns Beijing to take currency bill as warning over yuan
U.S. senator warns Beijing to take currency bill as warning over yuan

U.S. Treasury Secretary Henry Paulson and other officials are trying to forestall drastic action by Congress. Paulson is leading a "strategic economic dialogue" with Beijing over currency and other disputes, and says it is producing results.

This is the latest development in a trade war with China that is largely going un-noticed in the mainstream media but has been discussed here at ATS:

United States Sanctions China! Just in!

China Shifts to Euros for Iranian Oil

US Considering China Sanctions

China a Leader in Scramble for Oil - Rocks Geopolitical Boat!

Russia, China Sign Four Billion dollars of Trade Deals

China Needs Us To Buy Their Cheap Goods... NOT! (Op/Ed)
.
edit: link fixed

[edit on 8/7/2007 by Gools]

Something has to give. China wants to be this world power but undervalues its currency to keep the balance of trade well in its favor. So lets say they do liquidate thier treasury holdings. Take down the US economy. Sure the US gets hurt, but what about the ChiComs? They also cause a recession with thier biggest trading partner. So while they may not suffer as bad, thier flow of currency will drop as well and thier economy will also be taken down a peg.

Europe will not or perhaps take up some of the slack

Integrated global economies are funny like that

China crashes the dollar and the US will nuke their cities in the name of NS.

[edit on 7-8-2007 by TXMACHINEGUNDLR]

you can only piss in the eyes of the world for so long, until nations start taking a stand against you.

China's economy is China's business.
Its not china's fault the US blew $600 billion for no damn reason, while neglecting their domestic priorities.

Its like the stock market...Its all starting to fall to bits around them...
Not drastically, and not in a major way.. but slowly, and decisively the US is losing its clout, big time.

Originally posted by Agit8dChop
China's economy is China's business.
Its not china's fault the US blew $600 billion for no damn reason, while neglecting their domestic priorities.

Yes and no. We also can tax and tarrif thier goods if they refuse to compete fairly in the open market. In some ways it is. They financed our ability to do so no?

Originally posted by FredT
...fairly in the open market.

Care to tell the rest of us what that is exactly?

Not to target anyone in particular but, I love the way people resort to the argument that there exists some kind of platonic "truth" outside the real world where markets are "open and free" and that everybody should play by some set of "objective rules".

Seems to happen mostly when people are about to get their arse handed to them by an adversary they wasted no time in screwing over in the past.

There's no such thing as a "fair open market".

Never has been, never will be.
.

I have sold all the stocks I had because of reasons like this. I don't plan on buying any more soon if ever. As sad as it is the US no longer has any control over it's economy anymore, and this time a WW is not going to save us. I can't wait to see how the world we have been given will take shape.

Quit blaming everyone and take responsibility when it comes to Wal-Mart. They're doing what is in their nature to do - to make profit. We are the ones that drive the market.

Originally posted by grover
I too have argued this as the main reason we will not attack Iran. China gets a huge amount of its oil from Iran and they are not about to lose it if they can help it. They don't have to invade like they did in the Korean war; all they have to do is threaten to call in all the notes they hold to bring our economy (and any pending military action) to a screeching halt.

In a lot of ways I say good. Something has to stop this extremely destructive administration from starting yet another war. It would serve them right too for selling us to the Chinese in order to give their massive tax breaks to their already wealthy buddies.

Too bad the average American has to suffer for their greed and folly.

This certainly does spell a dead end for the White House projects. Unless... just imagine if another "terrorist attack" were to occur before the incumbent leaves office. Or could it be that the White House is purposefuly driving our economy to a halt in order to create context to enact and expand the SPP.gov Agenda?

Read more...

Why can't CONgress wait to tick off the Dragon till after I can get my hands on more silver? I knew I should have started collecting sooner.

I seriously don't see the Chinese doing anything to upset the status quo with their hoard of dollar denominated assets, at least until after the Beijing olympics. Congress can beat their chests all they want. They can't overide a veto of any bill that they pass anyway. Due to the upcoming Olympics China has a good reason not to throw the world into a recession. At least until after they've had the chance to pull off this little show for the rest of the world. After that all bets are off. I'm out of the market at some point before the '08 Olympics.

If they should do this however, I predict a clamor for a single (maybe 3 or 4 regional ones first) currency that will be unstoppable; and we all know what that means.

(breif edits to separate paragraph, and clear blank space)

[edit on 7-8-2007 by jefwane]

[edit on 7-8-2007 by jefwane]

Referring to US debt as China's political "nuclear" weapon couldn't be more appropriate. With risk spread pretty much across the board (albeit unevenly), the M.A.D. doctrine is bound to discourage, or temper any severe reactions. The destruction of the US economy would be a given, but China would have to be prepared to suffer a slowdown too. What happens to the value of China's massive dollar reserves if they initiate a panic sell-off? TIMBER! Another issue is China's growing oil consumption. They currently depend on the Middle East for over 50% of their oil imports...will these oil producing countries take kindly to having the value of their dollar reserves devastated?

In my opinion what we have here is Chinese saber rattling in response to US politicians, and presidential hopefuls that don't fully understand the consequences of their actions. In reality, all the Chinese have to do is curtail their ongoing purchase of US debt, and/or increase the diversification of their existing reserves...this has already begun...the slow bleed.

If a panic sell-off occured, China would be hurt no doubt, but they currently hold the economic trump cards. Agressive protectionism will benefit no one...especially the US.

[edit on 7-8-2007 by OBE1]

Originally posted by OBE1
Another issue is China's growing oil consumption. They currently depend on the middle the Middle East for over 50% of it's oil imports...will these oil producing countries take kindly to having the value of their dollar reserves devastated?

This may be a little bit off-topic, but I have always taken the view that our military presence in the middle east isn't to protect our grasp over the oil itself, but rather a stop against other countries. Tank our dollar, no oil for you! I don't have much actual proof, but it does make as much sense as any other theory as to why we are still over there.

Back to the OT, when (and yes, it's not an IF it's a WHEN) this whole thing blows up it will not be just a recession. I can easily see mass hysteria in this country at least ... and if other currencies tank in response we could have something worse than all these 2012 predictions on our hands. Or maybe that's what 2012 will entail ... ?

Originally posted by OBE1
Another issue is China's growing oil consumption. They currently depend on the middle the Middle East for over 50% of it's oil imports...will these oil producing countries take kindly to having the value of their dollar reserves devastated?

Then those countries will have to switch to the euro as well. And so the dollar will fall spirally. I guess China will slowly but steady get rid of their [dollar]reserves so it still have some value for their remaining reserves..
Ghe.. maybe China hopes the Olympic games will do as a fine visiting card getting other buyers.. let alone a good financial injection..

[edit on 7-8-2007 by Foppezao]