Wait... wait. I'm confused. We're now in debt to China over the credit card and mortgage thing? We've been dependent on them for years. It's not a new issue and I think the "they own us" stuff is a little silly. The trade imbalance is nothing new, but THEY are totally dependent on US. If we stop buying their crap then they are royally screwed.
I don't know how they supposedly own the government... but to each their own. At one point the talk was all about how Japan owned us (if you're old enough... you'll remember). Now it's China. Before those it was that we were being infiltrated by Communists. Before that it was Fascists. There is always going to be something. I think life is easier if we take more things at face value and accept that there's always going to be a "threat" and America will stay strong. Also accept that as America goes.... so goes the rest of the world. There are those who want to take America down, but there are way too many countries that rely on us to ever let it happen. Just my old man point of view. Take it for what you paid for it. 100% money back guarantee.
This is getting seriously OT, but here goes.
The reason that mortage rates are going up and bond rates are going down is because China has started to scale back on how much US Debt they will take on.
The only thing that is going to happen if the US stops buying Chinese goods is that the Chinese will;
1. Want repayment of the $1T we owe them.
2. Start selling their stuff elsewhere.
3. Stop financing our massive deficits. In case you weren't aware, you can't run up a deficit if no one will buy your debt, you end up being a banana republic with a worthless currency like Argentina.
The situation with Japan was completely different. In that case the issue was the trade deficit and the fact that Japanese companies were buying up US assets.
In the case of China it's not that China is buying up US
assets it's that China is buying up US
debt to gain leverage. You will note that the US no longer says diddly squat about their human rights abuses, etc, because we can't. China doesn't want any criticism from the US on what they are doing when they are basically financing the economic party that is still (more or less) going on in this country.
That's my story and I'm sticking to it!
