Some great comments from Billmon on CNOOC’s bid to buy Unocal.

It’s completely insane (or utterly craven, or both) to obsess over the $18.5 billion purchase of a second-tier oil company, when China is buying up roughly that same amount in U.S. Treasury and agency securities every quarter. China’s stockpile of Treasuries ($235 billion at the end of April) already equals almost 12% of all U.S. debt in foreign hands, and is growing nearly twice as fast as the global total. And that’s using the Treasury’s own figures, which probably undercount. Add in securities held through third parties, such as offshore banks, and China could easily be holding close to $300 billion in America’s national debt — second only to Japan. And unlike Japan, nearly all of China’s Treasury holdings are in the hands of the Chinese government.

If the dipsticks in Congress really had national security threats on their minds, they’d probably be worrying about that one — not the risk that ownership of Unocal might allow China to tamper with the U.S. oil supply in time of war. If that nightmarish scenario ever were to unfold, the problem of seizing and securing Unocal’s energy-producing assets would be trivial compared to the havoc that war would create in the global financial markets and the U.S. economy.

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