China's buying binge focused on Mae, Mac

The Washington Times reports:

China, which recently became the American government's biggest creditor, was bulking up on risky Fannie Mae and Freddie Mac debt and U.S. equities from mid-2007 to mid-2008 as the U.S. stock market reached record highs, a recent Treasury Department report confirms.

Then the financial crisis reached a fever pitch, sending equities plunging and forcing a government takeover of Fannie and Freddie.

After being burned on Wall Street and nearly scorched by Fannie and Freddie, China has significantly increased its appetite for low-risk Treasuries - just as the federal budget deficit approaches a record $1.8 trillion this year.

The report shows that China's June 2008 portfolio of U.S. securities included more long-term debt purchased from U.S. government agencies like Fannie Mae and Freddie Mac than long-term Treasury securities.

You'll want to read the whole article.