From this thread by DogPoundPup that talks about a Merrill Lynch analysis of US debt in light of the Fannie Mae/Freddie Mac situation and how things cannot continue as they are:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3401075DPP's post references this article:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/16/ccusdebt116.xml&CMP=ILC-mostviewedboxThere are more implications to this than just the creditworthiness of the US.
Merrill Lynch said foreign governments had added $241bn of US agency debt over the past year alone as their foreign reserves exploded, accounting for a third of total financing for the US current account deficit. (They now own $985bn in all.) By most estimates, China holds around $400bn, Russia $150bn and Saudi Arabia and other Gulf states at least $200bn.
China needs Iran's oil. Iran is a strategic trading partner with Russia. Another huge debt holder, Japan, absolutely must have a reliable energy source. These along with the Gulf States, including Saudi Arabia do not want to see that region explode into a fireball.
So to avert any war in Iran, all these guys have to do is threaten to dump the debt they have on the open market if the US attacks Iran. This will have the effect of causing the US economy to collapse to nothing on the spot.
Now, this also assumes there is some shred of rationality left in the WH, in spite of Cheney and that they are sane enough to heed these threats. If these bastards truly love this country as they claim, they will not put this country into a position of having the economy collapse on the spot if they invade Iran.
I'm not sure there is anyone there that is rational.
As it is now, foreign investors are now selling off their dollars. They own debt that is payable in dollars but the declining worth of the dollar makes it that even if they are paid the full dollar amount that is owed to them, low value of the dollar in relation to other things of value means they will not be paid the true amount due to them.
---------sorry to keep editing... didn't proof read the last para very well