Quoted:
The Chinese have as much to lose as we do if our economy fails. Without somebody to buy your goods you can't continue to grow, without a customer the producer also fails.
This is the argument I have a hard time with. Do they
really have
as much to lose? They make stuff that they send to us. We make very little, and mostly pass money back and forth between ourselves providing services to each other. To keep the game going, we offer unlimited IOUs and the Chinese gladly take them. Dollars get loaned back to our government, which the government uses to fund myriad entitlement programs to sustain the lifestyles of increasing numbers of American citizens (who being at the low end of the economic totem pole, buy more Chinese crap at Walmart).
Now anyone with half a brain from China looks at this situation must conclude that the game cannot continue forever. Four Chinese workers effectively work a total of 24 hours a day to sustain one American that works 8 hours a day. Sure, the math is a little rough since we have better infrastructure here (highways, etc.). But still, those 4 Chinese guys would get a better ROI if they traded their time for 16 hours of Indian work, or 20 hours of Japanese work, or 30 hours of Mexican work (ok, that last one is a bit of a stretch but you get the point).
They won't stop buying our debt cold-turkey, because it would be too disruptive. But if I was China, I'd be scaling back on the IOU purchases, and stepping up on purchases of tangibles. Like idunno, commodities and other raw materials needed if you had to go to war. Cause when a country that makes very little has it's credit card declined, things will get hairy. The productive people of said country will not be inclined to immolate themselves to sustain the lifestyles of non-productive people on entitlement programs.
Oh look, China is scooping up commodities.