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The subprime mortgage problem has now yielded a full-blown credit squeeze on Wall Street with securities firms' stock prices at fire-sale levels. The new fire-sale buyers are the so-called sovereign wealth funds, and China's are the most prominent.

With the world's largest trade surplus, China is accumulating foreign exchange reserves of about $1 billion per day. Rather than holding these reserves in low-paying Treasury securities, China recently created a new sovereign wealth fund--China Investment Company (CIC)--to invest these funds more profitably. Market participants, pay attention.

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What's going to be screamingly funny is when the hypocritical Republican asshats all rear up on their hind legs and demand controls over capital flows on the grounds of national security.

I would support that position if it included foreign corporations but apparently we have nothing to fear from American capitalists because they only control their government and never use government corporations to further their self interest.

Faced with technological and economic challenges from Germany and Japan in the 1980's, the U.S. invested in public research and developement and handed off certain technologies to private enterprise to spruce up American capitalism. The result was the personal computer revolution and economic boom in California's Silicon Valley. They've been trying to reproduce Silicon Valley around the U.S. and Canada since then.

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Originally posted by Fidel:
I get the feeling that banks will try to sandwich billions of dollars worth of bad debt in between thinner layers of high quality debt, like car loans and mortgage refi's - and pawn that off to the suckers, I mean, the Chinese and whoever.

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The Chinese and others have finally gotten wise to this scam, which is why they are now buying US hard assets rather than debt.

Taiwan Closes Chiang Kai-Shek Mausoleum No more guards watching over the one-time western backed fascist dictator's remains.