The Looming Economic Meltdown

This is the first article (but probably not the last) where China is making overt threats about selling its holdings in US currency:

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

It's all coming together, at some point on the "event horizon" (I'm guessing September or October) there will be an economic collapse unlike anything we've seen since the Great Depression. Some additional opinion courtesy of Randolphus Maximus (booyah!!).:

• The subprime mortgage collapse is not where it stops, you are going to see "prime" borrowers following suit.
• There is going to be a massive stock market correction, also in September or October. There might be additional highs reached before then, but like I said in a previous post. Get your shit ready.
• "Product recalls" of everything from pet food to toys that use lead based paint are some examples of our "economic sanctions" that we've lobbed towards are largest trading partner. Look for more of that as well as increased scrutiny of other Chinese products.
• As well as a continued move away from the dollar as the world's reserve currency. The dollar has continued its freefall against the Euro. We accuse China of currency manipulation but we have done the same thing for the last few years. Since the government stopped publishing official M3 numbers. No one knows exactly what the money supply "officially" is.

What does all of this mean? The party might be over for us, and the bills are coming due. We have reached a point where even China is starting to say we're maxed out. Our reaction is "we don't want your crap anyway". Someone is going to lose out and I'm guessing since we don't hold any cards, it's us. Put your money into gold or bicycles, or put it into international assets (while you still can). The sky is falling. This "is the big one" like Fred Sanford used to say.

All is not lost, yet. Our economy, our people, our entrepreneurial spirit can recover fairly quickly if the government will get the hell out of the way. It's probably not going to happen.

UNLESS YOU ELECT RON PAUL for President.