What If China Dumps Its U.S. Debt?

The box for a wine refrigerator reading ''Made in China'' at a Costco store in Everett, Massachusetts, January 18, 2011. Credit: Reuters/Brian Snyder

Analysis: What Is Plan B If China Dumps Its U.S. Debt? -- Reuters

(Reuters) - When borrowing money it's always good to have a Plan B in case a big creditor pulls the plug. That should be true whether the sum is a few thousand dollars or about a trillion, the size of the United States government's debt to China.

With Chinese President Hu Jintao due to arrive in Washington on Tuesday, it is worth asking about U.S. officials' Plan B just in case one day relations take a surprise turn for the worse and Beijing dumps its holdings of U.S. treasuries.

China is officially the United States' biggest foreign creditor, with roughly $900 billion in Treasury holdings -- or over $1 trillion with Hong Kong's holdings included.

Read more ....

My Comment: A Plan B !?!?!?! .... Washington never plans when it comes to finances .... they just react.

US Watchdog: Catastrophic Financial Meltdown Looms

Photo: Neil Barofsky. special inspector general overseeing the $700 billion Troubled Asset Relief Program. Photo from Top News

Watchdog: Bank Bailouts Created More Risk in System -- FOXNews.com

The problems that led to the last financial crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

The government's bailout of financial institutions deemed "too big to fail" has created a risk that the United States could face a worse fiscal meltdown in the future, an independent watchdog assigned to review the program told Congress on Sunday.

The Troubled Assets Relief Program, known as TARP, has not addressed the problems that led to the last crisis and in some case those problems have festered and are a bigger threat than before, warned Neil Barofsky, the special inspector general at the Treasury Department.

Read more ....

Update: Swiss warn UBS bank could collapse -- Breitbart/AFP

My Comment: The headline caught my attention ... I am also sure that it also caught yours. Gotta love FOX news to put up the most attention grabbing headlines possible.

On a more serious note, there is some legitimacy to be concerned. I sometimes feel that we are sleepwalking to a precipice, and the bottom is just about to drop. But no one wants to look at the reality of the situation, which is that we are highly leveraged and deep in debt but unwilling .... or unable .... to confront the crisis at hand.

Hence we talk about unemployment, health care reform, cap and trade, global warming .... all important issues .... but the 800 lb guerrilla in the room that represents our debts and future obligations is ignored.