Indeed. And if China starts it other countries will dive on board hoping to get at least some of the value of their money before the US collapses under it's own weight.
Now, those other countries are fucked in the end because the US drives so much of the world economy and they can't exist without that force as they do now, but China will be more or less fine.
We're China's largest consumer. They screw us, and they screw themselves in the process. It's not a pretty situation, and Bush is a moron for driving us farther in to debt when we were poised to start paying it off, but it's politics as usual, really.
China killing the US economy causes all kinds of problems for themselves. The thing is, those problems are *less* than the problems the US will have, and they can cause those problems in fits and starts.
What they have is a massive amount of leverage, that they're never *sure* won't cause the ball to roll down the hill.
Yup, absolutely. Overseas manufacturing contracts would collapse fast if the U.S. credit system went under, but the States would get the worst of it. We wouldn't be too happy up here either: standing beside a sinkhole isn't a stable situation.
I think that they could have waited and done better, but they got greedy. Playing the long game might have left them with the upper hand, but they're now starting to cash in their advantage: the U.S. will begin to change direction to reduce their exposure to this risk, and China will gain from it, but won't be in a position to match them at the end of it.
I've been writing about this scenario for a few years already, but I don't expect them to actually do it until they invade Taiwan, which they can't do while Bush is president. They know that he think he is God's anointed and would be happy to start Armaggeddon given a pretext. But once Bush is gone, I expect China to pull the plug on the US economy so as to leave the superpower floundering in its own problems before China makes the next move.
Of course, their hand may be forced. If the US$ loses its traction for other reasons, anyone who sits on enormous reserves is going to get hit badly. My native Norway, while hardly a great power, has a rather big bank account from accumulated oil wealth, and has gradually been selling down its US financial exposure for a while now. Policymakers here seem genuinely baffled that the US economy hasn't officially collapsed yet.
It's true, but its imports from China are more than half of everybody else's put together according to figures from the Congressional Research Service. There is also an avalanche effect; whether it would trigger or not is a hard guess.
True, but without us China is still pulling from the rest of the world. Also, without us China can sell to everyone that we sell to now. They'll do better than us in a bad scenario.
Gods, like none of us saw this coming *eye roll*. Sane people have been saying that so much debt owed to one country - and not an entirely certain or necessarily friendly one either - is a stupid idea. The short sightedness of supposed leaders is truly stunning
Like itlandm, I assumed this would be the card they played if they ever did invade Taiwan and wanted America to stay out of it - it's worrying that they're willing to use it more casually - and Norway isn't the only country that's been divesting herself of excess dollars
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(no subject)
Date: 2007-08-09 03:23 pm (UTC)(no subject)
Date: 2007-08-09 03:49 pm (UTC)Now, those other countries are fucked in the end because the US drives so much of the world economy and they can't exist without that force as they do now, but China will be more or less fine.
(no subject)
Date: 2007-08-09 03:54 pm (UTC)(no subject)
Date: 2007-08-09 04:22 pm (UTC)(no subject)
Date: 2007-08-09 04:39 pm (UTC)What they have is a massive amount of leverage, that they're never *sure* won't cause the ball to roll down the hill.
(no subject)
Date: 2007-08-09 05:05 pm (UTC)I think that they could have waited and done better, but they got greedy. Playing the long game might have left them with the upper hand, but they're now starting to cash in their advantage: the U.S. will begin to change direction to reduce their exposure to this risk, and China will gain from it, but won't be in a position to match them at the end of it.
(no subject)
Date: 2007-08-09 07:28 pm (UTC)Admittedly, I don't know their precise position on Bush and taxes. But they have been real supportive of some of his dumber policies.
(no subject)
Date: 2007-08-09 10:52 pm (UTC)It wouldn't be _great_ - but they wouldn't be completely fucked.
(no subject)
Date: 2007-08-10 01:29 am (UTC)Of course, their hand may be forced. If the US$ loses its traction for other reasons, anyone who sits on enormous reserves is going to get hit badly. My native Norway, while hardly a great power, has a rather big bank account from accumulated oil wealth, and has gradually been selling down its US financial exposure for a while now. Policymakers here seem genuinely baffled that the US economy hasn't officially collapsed yet.
(no subject)
Date: 2007-08-10 06:17 am (UTC)(no subject)
Date: 2007-08-10 11:54 am (UTC)(no subject)
Date: 2007-08-10 07:48 pm (UTC)(no subject)
Date: 2007-08-11 03:21 pm (UTC)(no subject)
Date: 2007-08-13 11:46 am (UTC)Like itlandm, I assumed this would be the card they played if they ever did invade Taiwan and wanted America to stay out of it - it's worrying that they're willing to use it more casually - and Norway isn't the only country that's been divesting herself of excess dollars