China showed more evidence today that they are the new hegemon on the block. Instead of spending a vast proportion of their wealth on military gizmos that likely have no use and are defective for their intended purpose, they have quietly amassed huge amounts of European and American debt.
Stocks had another turnaround Thursday and rocketed higher after China reassured investors it doesn't plan to sell the European debt it holds.
China's show of confidence in Europe let the market resume a rally that stalled late Wednesday following a report that the Chinese government was considering cutting its European debt holdings. If that were true, such a move would have signaled that China didn't think Europe would be able to contain its debt crisis. The agency that manages China's $2.5 trillion in foreign reserves denied the report.
Let’s hope they are as benevolent when it comes to our debt.