Keeping an Eye on the Long Game: Part XXIX

UPDATE & BUMP

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Though some worry about a couple of Chinese submarines making mischief east of Wake Island - me notsomuch, notrightnow.

Some fret over cyber attack from armies of Chinese computer geeks who have been sex-selective abortion-ized out of any chance of finding a wife and having a family - me kind of.

What really worries me (mostly because the Chinese know what debt will do to a once strong nation - see the financial source of the Opium Wars) the most is this;

But many at the Pentagon are starting to realize that, thanks to our growing fiscal irresponsibility, we may be surrendering control of America's destiny to a rival superpower -- and all without a shot being fired.

Consider the scale of the problem.

With President Obama's 2010 budget, 42 cents of every dollar the federal government spends will have to be borrowed. In the last decade, foreign investors have wound up lending us roughly half of all federal debt -- with just two countries, China and Japan, providing nearly half of that sum, or 44 percent, through the purchase of US Treasury securities.
China now tops Japan as our biggest lender by some $30 billion a year, at $789 billion. (By comparison, our No. 3 lender, Great Britain, comes in at a measly $277 billion).

But that's not all. As its booming economy becomes more global, China is also the world's largest holder of foreign-currency reserves. Most of that is in US dollars. Indeed, without most Americans realizing it, China has become the largest foreign holder of US dollars in the world.
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History shows that nations that can't control their economic fortunes don't control much else. Debt freezes destinies -- as every credit-card holder knows.

Europeans discovered that after World War II, when they lost the power to make major decisions without first checking with their lender-in-chief, the United States.

Bloodless wars can happen too.

One thing that mitigates this danger is something I have long held - China will grow old before she grows rich - so she won't intentionally cut herself off at the knees with such an important trading partner.

That is one view. You also have to remember that the United Kingdom, France, and Germany were all just as interconnected before WWI. No sane person wanted that war.

Often times, sanity and history are in conflict. The more areas of extreme vulnerability you create - the more you are open to insanity.

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UPDATE: I told you so.

Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday.

The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.

That is why you read CDRSalamander .... be beat Drudge by a day.

Yep, Galrahn - we need to do a China Midrats soon.