Letters to the Editor
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and then there's China
I would have missed this article if not for an eagle eyed friend.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
Maybe it's all bluster, but it sure does seem like a serious issue. The article talks about how China is considering the "nuclear option" of liquidating its holdings of US treasuries if the US through trade sanctions attempts to force a reevaluation of the yuan.
Of course, if we're talking about currency valuation we could bring up the idea of the US petrodollar or Iran's desire to untie the value of oil from it. I'd argue that much of our meddling in the Middle East is about the value of American currency.
One could make a convincing argument that our real objective in eying Iran, as the Bush administration is, is not preventing the accumulation of nuclear weapons - something that is years away - but to prevent destabilization of the dollar through the introduction of an Iranian oil market. Iran asked the Japanese to pay for their oil in Yen as recent as in the past two weeks.
I'd argue that economically the US has to find out how to have a viable economy without buoying it with revenue from oil sales due to selling oil in US dollars.
The petrodollar issue is serious. The mortgage mess and unregulated hedge funds are serious issues. Now China threatens to cash in their chips.
Oh, and if you haven't seen Jim Cramer lose it talking about the market... this should almost be its own story. It's amazing. Consider how hopped up he usually and then imagine him losing his cool, completely.
http://www.youtube.com/watch?v=SWksEJQEYVU
It makes for good TV but doesn't make me feel any better about where the market is or is headed.