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09-12-2009, 08:02 AM
There are 3 possiblities, the reported value of the bonds is incorrect, the bonds are fake, or the Chinesse or Japanese government are getting rid of their bonds. Japan currently holds about $630 billion and China holds about $740 billion. After Japan and China the next largest sinle holder of US debt is Brazil at ~$130 billion.
Those number lead me to believe that the reported value of the bonds is wrong combined with them being fake. I don't see any benefit to Japan in dumping US bonds in order to drive the value of the dollar down. Had the dollar not dropped so significantly against the yen the Japanese economy would be doing a lot better. Selling products for 75% of the price you were selling them for a year earlier when your production costs are the same is a good way for even a strong company to lose money. Driving the dollar down more would only hurts Japanese manufacturers more.
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