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China & US – Two two-trillionaires November 14, 2008

Posted by tkcollier in Economy & Business, Geopolitics.
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China hold 2 trillion of our debt according to this analysis ( simply SAFE is the Bank of China and the RMB is their currency).
Because a lot of the vulnerabilities that built up in the US economy between 2003 and 2007 can be linked – in part – to large purchases of dollars by SAFE during that period. Holding the RMB down discouraged investment in tradables, and encouraged investment in non-tradeables (think homes). And the rise in China’s surplus even as the oil exporters surplus was growing implied large offsetting deficits in the US and Europe – deficits that were found in the US household sector. Brad Setser: Follow the Money » Blog Archive » Two two-trillionaires

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