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Breaking News: China Threatens to Dump U. S. Treasuries

Reported by Marie Therese - August 8, 2007 -

On FOX & Friends First this morning the trio of hosts made the startling announcement that China has threatened to dump US treasuries, which would precipitate a recession. According to this morning's Telegraph "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." In layman's terms, China doesn't like the fact that a number of Congressmen have proposed legislation that would protect American businesses by forcing China to revalue the yuan. With video

The Telegraph article went on to say:

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Treasury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

COMMENT

So let me get this straight.

China - a Communist dictatorship - is in the position of being able to tell the American Congress what to do because we've been borrowing astronomical sums of money from them in order to fund a botched war and give a nice big tax break to the wealthy.

I can't believe this is happening. China is quasi-barbaric nation that believes the best way to solve its quality control issues is to hold a show trial and execute the government official responsible for product safety.

I feel like I've gone down the rabbit hole and there's a large white bunny telling me he's late, so late, for a very important date while a smiling cat appears and disappears at will.

The sad fact is that I don't trust this Congress or this President. I'm afraid that, when the Chinese say "jump," this bunch of pantywaists will ask "how high?"

What a mess ...