In case one is curious, most of the “sub-prime mortgage collateralized obligation” ruckus is due to Japan getting super cheap access to the US market (120 - 130 Yen / US Dollar) and China getting the “strengthen the Yuan” and “level the playing field” tariff threatening rhetoric. The Chinese stopped buying new CDO paper in May - June with the result that the US and European banks in the last three weeks needed one trillion dollars in "emergency" funding to stay open.
The Chinese lack the dollar reserves to pull this off by themselves, I think; as I read things petroleum producing government dollar reserves were pulled out of the CDO market on and just previous to July 17th with the results we have all seen. These dollar reserves are something like ten - fifteen times larger than China's.
I don't think we will see much of dumb as rocks US politicians talking about putting tariffs and "health inspections" on Chinese goods for a while. Probably we have seen the last of the poisoned pet food - lead paint on Mattel toys type stories too. The Chinese showed us unmistakably that they can crash the US and international banking system at will and WILL NOT be pushed around.
"Crashing the banking system" is the same thing as "almost all really rich people are suddenly without a nickel." Not exaggerating.
I know. I did not realize that oil-producing countries are working in concert with China.
The lesson from globalized finance:
We have no choice to buy hazardous craps to keep our financial system afloat.
I suppose this will continue until the system crashes at not-so-distant future.