It looks as if the US taxpayer is on the hook for at least $800 billion. The federal government is set to place a conservator over Freddie and Fannie (the GSE’s).
The US Treasury has every incentive to make the central bank of China happy. This story is a perfect example of why it’s better to be a creditor than a debtor. If China decided to liquidate its US holdings, the dollar would be in trouble and US interest rates would go up.
Here’s an article from Reuters about these breaking developments.
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