Ruh Roh: In Just the Last Few Months, China Has Suffered a $100 Billion Loss on its Investments in U.S. Treasuries

Tyler Durden observes that the United States' biggest loan-shark -- the People's Republic of China -- has suffered a $100 billion loss in its investment in Treasuries.

...at the end of July... China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar.

how much longer will Beijing tolerate the USD devaluation by Ben Bernanke? Instead of Congress being so focused on getting China to revalue the Renminbi, perhaps they should be more concerned what happens when China realizes its investment in US securities now carries the threat of total loss at the pace Bernanke is destroying the reserve (for now) currency.

And this calculation should also be applied to the Fed as well: instead of parading how much money the Fed has made on behalf of taxpayers on its $2.4 trillion UST holdings, perhaps Bernanke can adjusted this number for the dollar value loss. Somehow we think the result would not be quite as attractive.

If you owe a loan-shark, say, $15 grand -- and come up short one week -- odds are that three thick-set men wearing leather coats will show up in your living room at 3am. And then the best possible outcome is a broken leg. I mean, I'm just guessing here, not that I know first-hand. Seriously. No, I mean it.

So what happens when your economic policies cost your loan-shark $100 billion, President Obama?