China's exposure.

The U.S. Treasury's takeover of Fannie Mae and Freddie Mac is good news in the short term for China, the biggest holder of the giant mortgage lenders' debt, but Beijing's huge U.S. exposure still poses a serious risk, a prominent government researcher said on Monday.
China owned $376 billion of debt issued by U.S. government agencies, principally Fannie and Freddie, as of mid-2007.
The seizure of the two firms, prompted by worries over their shrinking capital, was the latest in a series of emergency steps taken by U.S. authorities to quell a year-long credit crisis that has helped push many economies toward recession.
The Treasury's equity stake could reach $100 billion in each of the lenders, which own or guarantee almost half of America's $12 trillion in home loans, but it said the ultimate cost of the rescue plan depends on how well the companies perform.
Bank of China said on August 29 it had slashed its exposure to Fannie and Freddie to $12.67 billion as of August 25 from $17.3 billion at the end of June.
Vice-Premier Wang Qishan, who is in overall charge of economic and financial policies, did not comment directly on the two agencies' woes. But, speaking in the southern city of Xiamen, he said the credit crisis was having "quite a serious impact."
Although the takeover of the mortgage lenders was a reminder of the investment risks China is taking, He said the country had little room to diversify its $1.8 trillion in currency reserves.
Buying non-government dollar bonds would be even riskier, while the euro is expensive and yields in Japan are low.
"If we don't buy U.S. treasuries and ABS, what else we can buy?" He said. "China just has no way to avoid the risks. Whatever we do, we have to bear the losses."
There was a vigorous reaction among Chinese Internet users.
A blogger on www.163.com said "a capitalist country is now acting to save the market and protect investors," whereas China's government had sat idly by during a 64 percent plunge in the Shanghai stock market since last October.
"How can Chinese stock investors not be sad? How can they not lose confidence?" the post said.
The main Shanghai index (^SSEC - News) shed 2 percent on Monday, touching a fresh 20-month low, despite a rally elsewhere in Asia triggered by the takeover of the two firms.
"Hope that China's stock market will get government help like Fannie Mae and Freddie Mac, not just lip service," a blogger named "Bang Ni" on sina.com.cn said.

Tracking the Dow on Friday,12/09/08

QUADRAPLE WITCHING DAY:19/09/08

9:30am:--Bearish 80.0 points gap.
The Treasury and the Fed are working on the sale of Lehman Brothers (LEH) through a consortium of firms.
10:30am:--Shooting stars.
Energy is trading with the largest gain among the ten economic sectors.
11:30am:--Shooting Stars.
The University of Michigan Preliminary Consumer Confidence Report for September came in at 73.1, reflecting substantial improvement from the 63.0 registered in the prior month.
12:30am:--Bearish Hammer.
Stocks continue to trade in choppy fashion.
1:30pm:--Morning star
Producer prices declined 0.9% in August (consensus -0.5%) after increasing 1.2% in July and 1.8% in June. Core PPI, which excludes food and energy, rose 0.2%, in-line with expectations.
2:30pm:--Dragonfly Doji.
CNBC reports that AIG (AIG 13.36, -4.19) may announce a turnaround plan before Sept. 25. The insurance giant is trading with a massive 24% loss.
3:30pm:--Hammering bulls at MAV line.
As for Washington Mutual (WM 2.77, -0.06), a midday report that JPMorgan Chase (JPM 41.17, -0.48) is in advanced discussions to acquire the downtrodden savings and loan institution led to a recovery effort. However, JPMorgan stymied the rally when it came out to say it is not in negotiations, according to CNBC.
4:00pm:--Ascending soldiers.
The advance continues to spill over.
Friday's dragonfly doji looks a bit of a bearish spin but resting near the breakout point.
It can still propel upward powerfully and also jolted it down to the bear pivot line.
Lehman Brothers is still the main culprit of the day.