re: "...if the value of the dollar dropped, so would the value of China's remaining dollar-denominated assets."

Not so.

As the article points out: "It would also cause a spike in US bond yields...It is estimated that China holds over $900bn in a mix of US bonds.

Fact is, China owns us.

Excerpt from The Invisible Hand (of the U.S. Government) in Financial Markets by Robert Bell

In effect, the basic racket is: the Bush administration exports jobs to [China], and in turn they finance Bush’s fiscal deficit so he can continue his wars and cut taxes for his friends. For the Chinese, the basic racket is too delicious and too ironical. They industrialize their country at the expense of the de-industrialization of the U.S. Not only is it sweet revenge for more than a hundred years of humiliation at the hands of Europeans and Americans, but also at the end they are relatively strong and the U.S. is relatively not. What do they care if the deal isn’t quite as good as it would be in a perfect world and they lose a third, half, two-thirds of their savings in U.S. Treasuries? Besides, in an even mildly less imperfect world, the U.S. President would not make such a blatantly corrupt bargain against the people of the U.S. Billionaire investor Warren Buffett calls this system of indebting U.S. citizens to foreign governments “a sharecropper’s society,” to distinguish it from Bush’s supposed “ownership society.”

http://www.financialsense.com/editorials/reality/2005/0403.html

Judging from the response of progressive Democrats to the latest capitulation by House/Senate Democrats to King George on the FISA matter and their seeming unwillingness to use their Congressional powers to bring this criminal administration to justice, I wouldn't be too sure that any Democrat has a lock on the presidency -- or congressional seat, for that matter. Many of the very slim Democratic majority in Congress made it there on the thinnest of vote margins. If the progressives become disillusioned, as is rapidly becoming the case, this could spell the end of any Democratic advantage.

The Dems had better very quickly become the true adversarial party many people thought they were voting for in the last election, or they're gonna be in trouble, big time.

@JonBoy re: "Scorpio's nonsense"

Uncle Sam, your banker will see you now

"At this point, China does not need to sell a single bond. In an instant, China has made it clear that US interest rates depend on China, not on the Federal Reserve. The precarious position of the US dollar as reserve currency has been thoroughly ignored and denied. The delusion that the US is "the world’s sole superpower," whose currency is desirable regardless of its excess supply, reflects American hubris, not reality." (MORE)

-Paul Craig Roberts, Assistant Secretary of the Treasury in the Reagan Administration

http://onlinejournal.com/artman/publish/article_2283.shtml

P.S. This is also an interesting piece on a slightly different topic, published today:

The mandarins of money

Central banks in the rich world no longer determine global monetary conditions

"The days when central-bank watchers could just focus on the Fed and perhaps the ECB in order to assess “global” monetary conditions are over. They no longer control the amount of money sloshing around the world and, as financial markets become ever more linked, analysts will need to pay more attention to central banks in the emerging world. They may even have a bigger role to play in stabilising the global economy if the squeeze in the credit markets becomes more acute."

http://www.economist.com/finance/displaystory.cfm?story_id=9621595

Come writers and critics

Who prophesize with your pen

And keep your eyes wide

The chance won't come again

And don't speak too soon

For the wheel's still in spin

And there's no tellin' who

That it's namin'

For the loser now

Will be later to win

For the times they are a-changin'...

Glad you're here. Please comment more on these economic posts. You're certainly more well versed in this stuff than I, a simple layman who is only trying to understand it all as best I can.

Here's another interesting piece in the current Newsweek:

A Widening Credit Squeeze?

With the home-mortgage crunch roiling stock markets, economists are beginning to worry about America’s credit-card debt.

http://www.msnbc.msn.com/id/20201030/site/newsweek/site/newsweek

And here's the place you can go if you need $:

Need help with a down payment? Ask the Army

http://www.msnbc.msn.com/id/20205033/

The implication here is that going bald is akin to a horrible disease or something. Get over it already! Quite a large percentage of men go bald. And with the increasing number of non-baldies shaving their heads so they can look as cool as those of us who come by it naturally, I really have to wonder what all the fuss is about. In any case, if your ego and sense of self worth is hung up on your hair, it seems pretty shallow and pathetic. Jesus, whatchya gonna do if you ever suffer a real physical tragedy?

Sure, some women don't like bald men, period. Tough. Some, though, do. The vast majority, in my experience, are more interested in your non-fleeting qualities. If they aren't, why lose any sleep over what they think?