Dan - thanks -
The fact is, however, that at some time the threat of Asian governments running down their colossal dollar holdings (which constitute the bulk of the US$1.9 trillion of official foreign exchange reserves held in Asia) is going to crystallise.
I have a problem with the word "crystallize", as it implies that there will be a certain threshold reached where change is certain and sudden. I think it's clear that Japan is stuck. There are only two reasons for them to get themselves unstuck:
1. Panic in the foreign exchange markets, which I can't really see happening, as the central banks s/b able to stop that.
2. Japan weans itself from dependence on exporting to the U.S., and the world weans itself from dependence on the deficit-financed Pax Americana. The former may happen slowly, and I guess it has been happening for quite some time. The later may happen rather quickly, particularly if it is seen that America's military might is insufficient in some way, like chaos in Iraq, or a large terrorist event.
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