ARTICLE: China threatens 'nuclear option' of dollar sales, By Ambrose Evans-Pritchard, Telegraph, 08/08/2007

The relationship between China and the U.S. regarding its great financial interdependency remains immature at this point, which makes it easily subject to blustery threats and alarmist charges (and even more fantastic solutions) from politicians and wonks on both sides. To me, this mutually-assured destruction scenario is still in its Curtis LeMay-like phase. People just have no idea what they're blathering on about, but blather they will. Why does China threaten? Well, obviously it fears America exercising dramatic control over its economy, just like Clinton raises the specter of Chinese control over ours (harder, given the absolute size differential, which means China's "bomb" is smaller than ours--namely, they give us trouble on dollar but we deny them a sales market they cannot live without). That's the essential nature of the MAD interplay. Clearly, neither side is comfortable with that reality, so the rules must be worked out, like they were long ago with Europe and not so long ago with Japan. Why I find fascinating? This currently poor and sophomoric strategic dialogue reminds us that its the financial MAD that will mature our relationship with China, not Taiwan or China's subs, which, in comparison, seem like puny issues. Dangerous? You bet. The chance for miscalculation is not small, and much growing up to do in the meantime. How do we grow up? That's the scary part. We do it by surviving crises. Thanks to Dan Hare and Brad B. for sending this.