Don't look over here... next mash-up likely to be US & China - not Iran.

This is only partially about our economy and what might happen if the Chinese "call in all their markers" by transferring all of our debt they hold to some other currency (like the euro) or just outright dumping it. Since August, foreign central banks and governments dumped a whopping 3.8 percent of their holdings of US debt. Most of this was from China and Taiwan which is who this post is about and what may spark more economic retaliation from China.

It seems the US is wanting to sell 2.2B in weapons to Taiwan and needless to say http://afp.google.com/article/ALeqM5iHPZcd_FrNpceLEHBR2_c28l8CdA">China is a wee bit pissed.



So here is the rub, not only are they already worried about holding US debt in US dollars (side note: foreign investors hold about 4.4Trillion in US debt), they have already shown a willingness to "dump this debt" prior to this issue, and we are planning a weapons sale to a "non-state" (according to Chimp logic) that wants to join the UN against the desires of China who sees Taiwan as belonging to them.

Bottom line, the $2.2Billion sale is trivial to the potential economic impact if China's first response is to dump ALL their debt and certainly far worse if they opt for more aggressive retaliation.

Once again, team Bush is creating a new serious world crisis (Iran) rather than trying to manage and diffuse yet another one they have already created by being greedy (or stupid).

So keep your eye on this. I predict if they dont focus on it, things are going to turn ugly.

MZr7

Where else are they going to find a country with 300 million people who are voracious consumers buying useless, cheap shit in such mass quantities? We're they're ticket to superpowerdom.

http://www.taiwandocuments.org/tra01.htm

United States Code
TITLE 22 - FOREIGN RELATIONS AND INTERCOURSE
CHAPTER 48 - TAIWAN RELATIONS

Sec. 3302. Implementation of United States policy with regard to Taiwan
(a) Defense articles and services
In furtherance of the policy set forth in section 3301 of this title, the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.
(b) Determination of Taiwan's defense needs
The President and the Congress shall determine the nature and quantity of such defense articles and services based solely upon their judgment of the needs of Taiwan, in accordance with procedures established by law. Such determination of Taiwan's defense needs shall include review by United States military authorities in connection with recommendations to the President and the Congress.
(c) United States response to threats to Taiwan or dangers to United States interests
The President is directed to inform the Congress promptly of any threat to the security or the social or economic system of the people on Taiwan and any danger to the interests of the United States arising therefrom. The President and the Congress shall determine, in accordance with constitutional processes, appropriate action by the United States in response to any such danger.

in order to squeeze our nuts in a vice. all they have to do is stop buying t-bonds.

we barrow 200 billion a month to pay the interest on the national debt. if china, japan or south korea decide they don't want to keep buying up our debt, they just stop. The wheels of our society would come flying off.