China as the lender of last resort

Inspired by an article in The Times, Denis Cooper (via email) has followed through the logic:
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As of July 2008, China had $1.8 trillion in accumulated foreign currency reserves, the result of its exports to the west, outstripping Japan with $1.0 trillion:

I stand to be corrected, but I guess -

a) The Chinese could offer to buy "toxic assets" from the western financial institutions and sort and recycle them, rather as they've been taking our physical rubbish and sorting and recycling it; but

b) They wouldn't know what price to pay in order to be sure of making a profit, as nobody can say how much of value there is any of those "toxic assets"; and

c) They can't be allowed to pay an absolutely safe rock bottom price, because then the western financial institutions would get so little cash that it wouldn't go far towards solving their liquidity problem; so

d) The Chinese will go for the infinitely safer option of buying US Treasury bonds, expecting that US taxpayers will be able to repay them with interest; and

e) The US government will then use that money to buy the "toxic assets" from the financial institutions, possibly at a discount to their real value; but

f) If the discount was too great, once again the institutions would get too little cash to solve their liquidity problem; and

g) As the US government is now a buyer in the market, and is known to be desperate to shore up the institutions, and is also known to have effectively unlimited supplies of taxpayers' money at its disposal, it will probably end up buying the "toxic assets" at a premium to their real value; so

h) When it's all been sorted out, which may take a decade, because a lot of it ultimately involves residential property and there'll be political sensitivities about the US government repossessing people's homes;

i) The Chinese will have got their money back, with a profit, while the US taxpayers will have recovered some but probably not all of their money - it was about half last time round:

"In the 1980s Resolution Trust Company rescue, the government had the power to take over any distressed Savings and Loan bank and close it or sell its assets as necessary. This eventually meant that about half of the $400bn rescue package was recovered - but most of the banks closed for good"; and

j) At least most of the larger institutions will have been saved from the consequences of their own recklessness; and maybe

k) The Chinese will also have helped out the US government by investing in some of that residential property, at attractive prices, so that significant numbers of Americans will be renting their homes from companies owned by the Chinese government.
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I can't fault that, having come to much the same conclusion myself. The ultimate source of all these 'easy credit' must be China and the petro-states, and to a lesser extent, Japan. The mortgage borrowers can't or won't repay what they borrowed, and China will demand/will be fobbed off with some other assets instead.