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Read this carefully. The repercussions have the potential to wipeout the dollar as the world's reserve currency, leave our military stranded unable to get home, and cause unimaginable pain and suffering here at home.
The Chinese resent the trap in which they find themselves. They must buy dollars to prevent a dollar crash, but doing so funds US military operations. They find themselves holding the bag, not the gold, as the system comes apart. Worst of all, their holdings of US Treasuries and Fannie and Freddie are illiquid.
http://www.nytimes.com/2008/09/05/business/worldbusiness/05yuan.html?
scp=2&sq=keith%20bradsher&st=cse
Now consider what you would do, were you trapped. You would find a way to get free, with as little risk to yourself as possible, and would not care what happens to those you believe cheated you. Remember too that Chinese culture places a high value on mutual respect, and that the Chinese Tongs knew how to exact revenge when crossed.
Add to this mix the imminent government takeover of Fannie and Freddie, accompanied by a wipeout of the shareholders.
http://www.nytimes.com/2008/09/06/business/06fannie.html?hp Who are the shareholders? At home and abroad they are major banks, insurance companies and pension funds. They also are Central Banks, including the Chinese Central Bank.
The Chinese warned the US a week of so ago not to dare shaft them. The Chinese do not issue idle threats. They will look after their own interests as they perceive them to be.
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