The Chinese government has begun a campaign of economic threats against the US, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.  Two Chinese officials have given interviews in recent days warning that Beijing may use its $1.33 trillion of foreign reserves as a political weapon to counter pressure from the Congress.  Described as China's "nuclear option" such action could trigger a dollar crash at a time when our currency is already breaking down.  It would also cause a spike in bond yields, hammering the housing market and could tip the economy into recession. It is estimated that China holds over $900 billion in US bonds.

China has 900 billion of our dollars? Wow! But my friends, never fear!  President Bush is in charge and when he hears of this (though rumor has it he never  listens to anybody) he'll appoint an "Economy Tzar" or a "Chinese Threat Tzar," hold a press conference blaming this on all the Americans who aren't supporting America's war effort, and then chopper off to Camp David for a few weeks of R & R.

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