Good Morning! Today, Your Investments Lost 8 Billion Dollars

... is the report the Chinese have been getting lately on their $1T worth of US Treasuries. I wonder if palms are getting sweaty in Beijing? They don't seem to be getting sweaty in Washington.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

A 10.3% drop in the dollar is a $103B loss for the Chinese over the last 6 months. Ouch!

The short synopsis of the situation is this: We can't stabilize the dollar until we raise interest rates. We can't raise interest rates until we see economic growth. We won't see economic growth until the private sector starts expanding. We won't see private sector expansion while the government sucks all the money out of the economy.

The solution being proposed is massive health care spending by the government and possibly a second stimulus package.

Message to Beijing: I'd start buying Maalox. Lots and lots of Maalox.