“Uh Oh” Is Somehow So Inadequate
China’s starting to publicly threaten the dumping of its American dollar reserves.
(In other bad news from China, the Yangtze river dolphin is extinct.)
China’s starting to publicly threaten the dumping of its American dollar reserves.
(In other bad news from China, the Yangtze river dolphin is extinct.)
August 9th, 2007 la 7:53 pm
That post is the written equivalent of an Irish Coffee… While I get depressed over the loss of another species, I am simultaneously getting agitated over the first stages of a major possible economic downturn…
August 14th, 2007 la 11:00 am
Douglas Adams wrote about the dolphin in the lovely and heartbreaking “Last Chance To See”.
August 15th, 2007 la 9:49 am
The housing market’s already crashing. And wouldn’t all those “liquidated” dollars have to be spent on something in the U.S.? Otherwise, they go from “dollars under China’s mattress” to “dollars under Thailand’s mattress,” and there’s no net change.
Of course, currency speculators and illiterate sandwiches like Lou Dobbs should start panicking yesterday. But Lou Dobbs should always be panicking. It’s more entertaining.
August 15th, 2007 la 10:14 am
And wouldn’t all those “liquidated” dollars have to be spent on something in the U.S.?
No - what China’s threatening to do is call in the money owed to them by the United States in the form of treasury bonds, or alternately sell them at a loss. Either would send the American dollar plummeting.
August 17th, 2007 la 10:41 am
So the dollar crashes. China’s gone from holding a pile of debt instruments against the greatest empire in the history of intelligent life in the universe to holding a pile of dead presidents that will either (1) sit in a cookie jar losing value or (2) have to be spent on American goods. And since China already has a trade surplus with the U.S. - we import more from them than we export to them - it’s clear that the U.S. isn’t selling shit China wants to buy.
Don’t get me wrong - the 21st century has proven that spite is a perfectly legitimate motive for policy (see: U.S. v Iraq; “Iran 2008 - The Next Great War”). But this would hurt China as much as it would the U.S.
August 17th, 2007 la 10:52 am
So the dollar crashes. China’s gone from holding a pile of debt instruments against the greatest empire in the history of intelligent life in the universe to holding a pile of dead presidents that will either (1) sit in a cookie jar losing value or (2) have to be spent on American goods.
Note that the option of gradually selling their bonds to other parties remains for China, which would be a useful tool to keep them from losing too much money.
Further note that none of this would even remotely be an issue were the dollar not steadily tanking all on its own. If China’s going to lose a lot of money because the dollar tanks, it’s likely in their best interest to be the ones tanking it rather than just taking it in the ass.
August 18th, 2007 la 8:11 am
it’s likely in their best interest to be the ones tanking it rather than just taking it in the ass.
Again, I don’t buy this for any reason other than “spite,” but we’ve established that, if that’s a motive, anything’s possible.