Wednesday, August 08, 2007

China and US dollars

I read today from the newspapers China maybe liquidating all the US dollars they hold. That's 1.33 Trillion dollars. At the moment USA is borrowing dollars from China in order to buy products from China. If China does what they hint, this would inflate dollar so badly I think the whole American economy would collapse.

900 Billion dollars in US treasury bonds... That's a lot of bonds.

This would affect us in EU as well. Maybe Euro would stand a chance, but we are so heavily merged our economy to US that the inflation would be bad for our economy too.

I hope to hear more about this in the next weeks. Like the whole UK vs Russia diplomatic "scandal" seems to be drying out. I guess UK was just ruffing its feathers or something. No follow-through. Haven't seen anything on the news about the incident.

World leaders, here's a free tip: Use as delecate diplomatic skills as you have when you are dealing with countries that have different point of view from what you have and have enormous mass behind them - like China, Russia and Japan. Just try not to shoot yourselves in the foot.

I don't want my bread to cost €10 000,00...

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