More on China's economic power over US (Greenspan's 15 June comments etc.): "At a commercial real-estate conference earlier this week, Alan Greenspan downplayed concerns that the Chinese might sell their significant holdings of U.S. Treasuries. The former Fed chairman based his opinion not on the inherent investment merits of Treasuries, but rather on their lack of them. His confidence stems simply from his belief that the Chinese have no one to whom they can sell. Furthermore, Greenspan sees this as a problem for the Chinese and not the U.S. Although the performance of U.S. Treasuries has long been regarded as poor vis-à-vis other classes of sovereign debt, their overriding virtue has always been their supposed unrivalled "liquidity." As the most heavily traded asset in the world, it is argued, massive investors like the Chinese have few other markets in which they can operate. But if there are no significant buyers to whom the Chinese can sell, then there is no real liquidity at all.* If there is no performance or liquidity, why would they continue buying? True to form, Greenspan is completely wrong. The Chinese are not the ones who are stuck, the Americans are. In order to exit their positions in U.S. Treasuries, the Chinese do not have to sell, they only need to stop buying and let their existing bonds mature. Then the U.S. government, not the Chinese, will be the one forced to find new buyers for its debt. From: http://www.orbusinvestor.com/articles/gold-bonds-china/133 ----------------------- *Another reason why China is already in the process of getting out and using part of its dollar earnings now for investments other than Treasury issues, either via funds, or directlly in Africa etc. For example, last week Chinese built 200 million dollar satellite was launched for Nigeria. Nigeria paid for it with 200e6 dollar loan from China. That loan will be "repaid" by sending oil to China. Effectively the dollars were just transfers on the books (Dollars are used all over the world as "book keeping / accounting" and probably will be for many years, even as they become worth much less.) In reality what happened was China exported a satellite for future oil supply. China is making these type of deals all over the world for raw materials for the next 30 to 50 years. Its factories will be hard pressed to supply the goods that will both (1) pay for these imports and (2)supply its rapidly expanding domestic market, which in about a decade will have more purchasing power than ALL Americans. The is when China will tell US : "Go to hell. We do not want your worthless paper anymore." It will then also be to China's economic advantage to collapse the US and EU economies so that they are buying little oil etc. in their deep depression state. When this happens, don't say I did not warn you. I have been telling you how to protect your self (buy ADRs etc.) for a year now.