Seeing red

Oh Dear, everything is red! We're back from our little trip and the only thing that's not red on my portfolio page is NovaGold Resources (AMEX: NG). That looks interesting - oh, now it's red too...a clean sweep. What kind of damage has Ben Bernanke done?

And, based on a quick trip through my inbox, where links to this story showed up in four different messages, it looks like China is seeing red over proposed U.S. trade legislation:

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Maybe the Chinese government is just mad at Alan Greenspan after he blamed them for all the credit market troubles in the U.S. the other day.

More later perhaps - clearly there's lots to catch up on.

Full disclosure: Long NovaGold at time of writing.