August, 7th 2007

China to hammer us?

– Liz Mair

I wrote awhile back that this bill that was being moved by Grassley, Baucus, Schumer and Lindsey Graham that would attempt to "deal" with China rigging its currency was bad news.

Turns out it is. According to the UK's Telegraph, China is now threatening a "nuclear option" of dollar sales, basically in retribution for trade sanctions that are on offer under the bill.

Were China to take this option, it could crash the dollar. Of course, they'd be silly to do it, because it would vastly increase strife between the two countries which no one really wants given the trade relationship. But still, they very well could. And it strikes me that since trade sanctions and tariffs are bad news anyway, that combined with this threat perhaps means that we should not be pursuing this bill apparently being backed by the Senate Finance Committee.

Duh, though, right?


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