The China Syndrome

Remember when the "China Syndrome" referred to the idea of a nuclear power plant "melting down?" That movie sparked our fears of Three Mile Islands occuring (and then we had Chernobyl). But I digress before I gress.....

The new China Syndrome can be found here In short, China is worried about its investments in US debt. Read about how US banks are beginning to reject the money from the US govt because of meddlesome "strings." Yeah, our Chinese creditors (soon to be called "overlords", ugh, would that be landlords) are nervous. Some excerpts (and commentary)

China, the U.S. government’s largest creditor, is “worried” about its holdings
of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.

I'm sure we can reassure the Premier. President Obama is very reassuring. He's a confidence builder. Will that be enough?

The Premier has specific requests:

“I request the U.S. to maintain its good credit, to honor its promises and to
guarantee the safety of China’s assets."

We've made promises? Different than to anyone else who buys T-bills? Uh, well, we could put an armed guard on the "assets"

For those who might be wondering what do the Chinese have to do with our spending spree, the Chinese provide more than just cheap (in so many ways) goods for our Wal-Marts.

“China’s purchases of American debt have been one of the few bolts keeping
the wheels on the global economy,” said Phil Deans, a professor
of international affairs at Temple University in Tokyo. “If China stops buying
where does Obama’s borrowing to fund his stimulus come from?”

Oh. I get it. So, the Chinese don't realize that they are caught in a gordian knot. If they stop purchasing our debt, their past purchases degrade....makes you want to go back to being the isolated exotic country it used to be, doesn't it.?.

Not quite afraid yet? What is here to compare to a nuclear plant melting down, how about this:

China should seek to “fend off risks” as it diversifies its $1.95 trillion
in foreign-exchange reserves, Wen said. Yu Yongding, a former
adviser to the central bank, said in an interview on Feb. 10 that the nation
should seek guarantees that its Treasury holdings won’t be eroded by “reckless
policies.”

Who defines "reckless policies?" Tax cuts could be seen as reckless, afterall, that is how we repay our debt. Or how about how we and the IMF and World Bank used austerity programs to bring Latin American welfare states to their knees by demanding cuts in social programs and more purchases of weapons. I'd prefer health coverage to a tank parked in my driveway.

“China is worried that the U.S. may solve its problems by printing money,
which will stoke inflation,” said Zhao Qingming, a
Beijing-based analyst at China Construction Bank Corp., the country’s
second-biggest lender. “If the U.S. can make sure this won’t happen, then China
will continue to invest.”

Oh, well, give them the plates, give them to the Chinese now, so they can do what they do anyway, just counterfeit the money (only it wouldn't be counterfeiting if we gave them the plates). Heck, just outsource the printing to them, we'll get it cheaper, they get more industrial jobs, and eventually they get the money anyway.

Now, those reckless policies, could they also mean something about our reckless foreign policies, like babbling about human rights, democracy, freedom, and hot dogs?

U.S. Secretary of State Hillary Clinton urged
China, while visiting officials in Beijing on Feb. 22, to continue buying U.S.
debt, which she called a “safe investment.” She didn’t press China on its
foreign-exchange policy, backing away from January comments by Geithner that the Chinese government manipulates its currency to boost exports.

We already know about Secretary of State Clinton's silence on the human rights and democracy stuff. Her new Chinese policy is clear: protect Chinese assets (our debt).

The solution is simple, buy more junk on credit to keep the Chinese economy plugging along at their targeted 8% growth, more Wal-Marts will open, thus employing more folks here, China gets its income, more folks will pay (higher) taxes, we can repay our debt, gosh, I'm worried about nothing. Hey, should I just ignore the blinking light on the control panel here?