......(Digest from CBS 60 minutes 4/6/08)

"Does the IMF have the power to enforce a code of conduct anyway?" Stahl asked.

"I don't think so."

"Is there any chance on this earth right now, that we could ever say, 'Look, if you don't agree to a code of conduct, even voluntary, you can't invest in our companies.' It's self-defeating, right?" Stahl asked Summers.

"We could say it, but it wouldn't serve our interests at several levels," Summers said. "It would mean that Americans would pay more for goods. It would mean that our interest rates would be higher."

In other words, we're all but dependent on Chinese investments. Beyond this fund, China holds half a trillion dollars in US Treasury bonds. For that reason economist Navarro says they have us over a barrel. If they don't like our behavior, he says all, they have to do is dump all their U.S. investments. It's known as the financial nuclear option.

"What would that do? That will cause interest rates to spike. Mortgage rates to spike. Inflation to spike. The dollar to go through the floor. The stock market to go into chaos," Navarro said. "We would be in deep, deep, deep trouble."

"The nuclear option, financial nuclear option is China’s pulling all its money out of U.S. treasuries," Stahl said to Gao.

"Philosophically every thing's possible in this world," Gao said. "But that's so unlikely that, you know, we if we function on that thing, we -- we just may as well go home and not doing anything."

Gao isn't going home. He says his fund is an extension of trust, not the betrayal of it. And to prove it -- despite losing money here, he just made another investment: buying over $100 million worth of shares in Visa.

Produced by Sachar Bar-On
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