Can someon Explain to me how CHINA can F**K UP the USA

Support Bush's policies?

..that sounds like it might have been up M Holmes' street - here's a selection

The Chinese Yuan is fixed at 8.something Dollars.

If they revalue or let it float, Chinese made goods will become more expensive to US customers as the Yuan takes off. A currently dropping dollar may exarcebate that.

However, I can't think why the Chinese would want the Americans to buy less of their products ... until they can develop their own national economy first.

Roland.

They don't want to lose exports to the US. The problem is that to keep the Dollar peg, the central bank is having to buy shedloads of Dollars. That gives them two problems:

1. The Dollar is going down. That loses the central bank money on its already vast Dollar holdings. If they quit buying, or perish the thought, start selling Dollars, then it'll drop even faster. If they keep buying, then they lose more as it goes down.
2. Buying all those Dollars means that the US credit bubble gets extended to China. This has shown up in real estate bubbles there. The central bank has been trying to puncture this gently by credit controls but as long as they keep buying Dollars, the effectiveness of this is in question.

If you want good summaries of what's happening in China, look for Steven Roach's stuff.

FoFP

"M Holmes" wrote

What does FoFP stand for?

If they had any sense they would hedge their dollar/bond purchases with euros or gold.

Roland.