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Politics : American Presidential Politics and foreign affairs

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To: TimF who wrote (22390)	9/2/2007 1:58:39 PM
From: Jim S	Read Replies (2) of 71588

There's an old saying about banks: "If you owe the bank $100K and can't pay, you have a problem. If you owe the bank $100 million and can't pay, the BANK has a problem." I can remember some of these same hand-wringing comments about Japan 10 or 15 years ago. Not to say the circumstances are identical, but there are similarities. China is undergoing more change now than during the Mao Revolution, and will have some serious growing pains in the future. While it's certainly true that the US can't call its debt, it's just as true that China can't sell its holdings to any meaningful extent. Worst case, IMO, would be if China simply quit buying US debt and started investing more heavily in European or Mid-eastern bonds (which are far less secure and productive). Even that wouldn't be as bad for the US as for China, because of the huge amount of private US capital flowing into China. That's the cool thing about intense international trade -- it make each country so dependent on the other that they can't AFFORD to go to war.

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