In his recently published memoir, former US Treasury Secretary Hank Paulson revealed that in August 2008 he learnt that “Russian officials had [earlier] made a top-level approach to the Chinese suggesting that together they might sell big chunks of their government-sponsored enterprise holdings to force the US to use its emergency authorities to prop up these companies”, referring to the debt issued by government-sponsored entities Fannie Mae and Freddie Mac.

Paulson said that the Chinese declined to co-operate, but opined that the report was nonetheless "deeply troubling", as "heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets". With the US needing to sell another $1.3 trillion in debt this year, how seriously should we take Paulson's concerns?