I have been reading a lot about the present government borrowing tremendous amounts of money to fund the Federal government and Iraqi war.


This is indeed a situation worth consideration. The U.S. government owes Billions of dollars to many nations. The largest amount seems to be to Japan and the Second is China. We are presently borrowing over a BILLION dollars per day.
This is money we, our children, and grand-children will have to pay back.

A former official of the People's Bank of China, the country's central bank, and now an economist at J.P.Morgan Chase & Co. in Hong Kong was recently quoted in the Washington Post as saying "the U.S. dollar is now at the mercy of Asian governments."

U.S. Rep. John Tanner
"Interest pmts alone will soon surpass all domestic discretionary spending like military, health care, education and infrastructure. Unlike those expenditures, interest is a tax on the American people that cannot be repealed."

What I am leading up to is this:(my opinion)

We owe China Billions, we will owe them more. We probably will not be able to repay.
China will not call in the debt because they rely upon us for imports and exports.

China wants Taiwan. The U.S. is Taiwan's main ally and key military supplier and has pledged to defend Taiwan if China attacks them. Although I am not sure we could the way we are tied up in the Middle East.

The mere threat by the Chinese to sell or call in U.S. debt could reduce our negotiating position on issues of national security and trade.

According to experts, China wants naval domination on both sides of the Malacca Strait, the South China Sea, Taiwan Strait, and to extend a navel presence far out into the Pacific. China has even shown interest in Japan.

China has acquired sophisticated Russian military ships and aircraft. China has inproved homeland production and development of a modern marine force.
China is modernizing itself.

China, unlike America, has patience. It's leaders calculate in decades. They are not accustomed to the "right now" attitude we seem to have in America.

China will have a lot of its modernization accomplished around 2010. I am not sure what the years after that will bring, but they will have a lot of bargaining power because of our financial debt to them.

Spending MUST be controlled in this country soon, or we may pay some severe consequences.

Spending MUST be controlled in this country soon, or we may pay some severe consequences.

Agreed. As much as I hate to say it, I prefer tax and spend democrats over borrow and spend republicans. Of course this is coming from someone that pays off his credit card every month.

Agreed. As much as I hate to say it, I prefer tax and spend democrats over borrow and spend republicans. Of course this is coming from someone that pays off his credit card every month.
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This is the reason the wife and I only use our Visa check cards. No interest or fees.

Agreed; in the long run our inability to control our own spending is far more dangerous than any tin-pot middle east dictator. And we still have missiles pointed at the same country we are borrowing so heavily from. Boy do we ever need a balanced budget amendment, I wonder why no one's ever thought of that before??? Unless of course we plan on renouncing our debt like Castro did his.

This is indeed a situation worth consideration. The U.S. government owes Billions of dollars to many nations. The largest amount seems to be to Japan and the Second is China. We are presently borrowing over a BILLION dollars per day.

... China has even shown interest in Japan.If we could sell Japan to China that would fix everything. :)

If we could sell Japan to China that would fix everything. :)
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Ahh, you catch on.
We never know what goes on behind political closed doors.

FWIW: 20-30 years from now, China will be the largest economy in the world and will stand as the only super power.

FWIW: 20-30 years from now, China will be the largest economy in the world and will stand as the only super power.

Gore Vidal, as usual, spoke one of the most profound truths imaginable concerning that situation;

"Now the long-feared Asiatic colossus takes its turn as world leader, and we—the white race—have become the yellow man’s burden. Let us hope that he will treat us more kindly than we treated him." ______Gore Vidal

Flashback to the late 70's: Japan will own our nation. We can't stop them.

"Let us hope that he will treat us more kindly than we treated him." [/SIZE][/FONT]______Gore VidalDoes that mean that he hopes that someday China will save us from a militaristic and murderous invading superpower like we did for them?

External debt is at 9 trillion right now - I don't know what our interest rates on those loans would be, but just for a quick estimate I'll say 5 percent - I know that's low for a loan, but I'm assuming that our gov't gets better rates than we do. That comes to 450 billion a year in interest payments out of about 2.25 trillion (Heritage foundation).
Thats 20% of our GNP paid off in interest payments a year.

Now, this is a bad thing, unless the money that we are being loaned is growing faster than the payments on those loans. Which obviously it's not, because the % of payment on interest compared to revenues has increased, so we should start cutting spending that causes money to exit out economy (importing goods for example), or increase revenues (taxes). Otherwise we will eventually default on our loans, and to pay them off our options might be limited to increasing production of money, and inflation would jump as a result - and everyone would lose faith in the dollar and our economy would crash and burn.

FWIW: 20-30 years from now, China will be the largest economy in the world and will stand as the only super power.

They have labor, and they are starting to use it. They are also one of the most empoverished nations in comparison to other developed nations, that means that they (for the moment) are able to have corporations use the labor and spend very little on it, thus giving them the ability to have cheap exports and flood foreign markets with textiles and other products. This will only last as long as their people remain in poverty and only as long as they will work for a meager wage. The problem for them is that they won't. News is regulated over there a huge amount, but with the internet they can still see the type of living that we have over here in the US and that will undoubtedly eventually spark them to rebell, form unions and force labor laws upon the government. When wages improve, the masses of extra labor that they have over there will mean much less and they will not be able to flood foreign markets as they have been.

I don't doubt that they will become a power to compete with us in the world, but I doubt that the growth that they have seen in the last decade will continue.

Nothing will stop China. PERIOD!

Nothing will stop China. PERIOD!

No, but China could "stop" the clock on the U.S. if it chose to.

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Debt: A Policy on Steroids

The Achilles heel of the American economy is certainly debt. It is generally assumed that increases in credit stimulate consumer demand. In the short run that is true, but the long run is another matter altogether. When debt levels are as high as those the U.S. is carrying today, further increases in debt created by credit expansion can come to act as a burden on demand. Signs of this are already in the air -- or rather in what has been, by historic standards, only feeble economic growth in the U.S. economy over George Bush's first term in office.

Think of the present mountain of national debt as the policy equivalent of steroids. It has so far managed to create a reasonably flattering picture of economic prosperity, much as steroid use in baseball has flattered the batting averages of some of game's stars over the past decade. But unlike major league baseball, forced to act by scandal and Senate threats, America's monetary and financial officials still refuse to implement policies designed to curb the growth of a steroidal debt burden. If anything, addiction has set in and policy has increasingly appeared designed to encourage ever larger doses of indebtedness. Each bailout or promise of a government safety net has only led to more of the same: the Penn Central crisis; the Chrysler and Lockheed bailouts; the rescue of much of the savings and loan as well as commercial banking system in the early 1990's; the 1998 bailout of the hedge fund Long Term Capital Management; and the persistent reluctance of U.S. officials to regulate the country's increasingly speculative financial system, which has led not only to fiascos like Enron -- the 21st century poster child for what ails the US economy -- but speaks to the dangers of excessive debt, corrupt financial practices, highly dubious accounting, and endless conflicts of interest.

The result of this reluctance to confront the consequences of America's credit excesses -- a federal government debt level that is now at $7.5 trillion. Of this, $1 trillion is ancient history; the other $6.5 trillion has built up over the past three decades; the last $2 trillion in the past eight years; and the last $1 trillion in the past two years alone. According to the economist Andre Gunder Frank, "All Uncle Sam's debt, including private household consumer credit-card, mortgage etc. debt of about $10 trillion, plus corporate and financial, with options, derivatives and the like, and state and local government debt comes to an unvisualizable, indeed unimaginable, $37 trillion, which is nearly four times Uncle Sam's GDP [gross domestic product]." This rising level of indebtedness will become a huge deflationary weight on economic activity if debt growth should seriously slow – which is the economic equivalent of a Catch-22.

The "Blanche Dubois" Economy

The situation of the American economy becomes yet more precarious when you consider that the country's major creditors are foreigners. Today, the U.S. economy is being kept afloat by enormous levels of foreign lending, which allow American consumers to continue to buy more imports, which only increase the already bloated trade deficits. In essence, this could be characterized in Streetcar Named Desire terms as a "Blanche Dubois economy," heavily dependent as it is on "the kindness of strangers" in order to sustain its prosperity. This is also a distinctly lopsided arrangement that would end, probably with a bang, if those foreign creditors -- major trading partners like Japan, China, and Europe -- simply decided, for whatever reasons, to substantially reduce the lending.

China, Japan, and other major foreign creditors are believed willing to sustain the status quo because their own industrial output and employment levels are thought to be worth more to them than risking the implosion of their most important consumer market, but that, of course, assumes levels of rationality not necessarily found in any global system in a moment of crisis. All you have to do is imagine the first hints of things economic spinning out of control and it's easy enough to imagine as well that China or Japan, facing their own internal economic challenges, might indeed give them primacy over sustaining the American consumer. If, for example, a banking crisis developed in China (which has its own "bubble" worries), Beijing might well feel it had no choice but to begin selling off parts of its U.S. bond holdings in order to use the capital at home to stabilize its financial system or assuage political unrest among its unemployed masses. Then think for a moment: global house of cards.

Already China has given indications of its long-term intentions on this matter: Roughly 50% of China's growth in foreign exchange since 2001 has been placed into dollars. Last year, however, while China saw its reserves grow by $112 billion, the dollar portion of that was only 25% or $25 billion, according to the always well-informed Montreal-based financial consultancy firm, Bank Credit Analyst.

Beijing has already made it clear that it will spread its reserves and put less emphasis on the dollar. As one of America's largest foreign creditors, China naturally has the upper hand today, like any banker who can call in a loan when he sees the borrower hopelessly mired in IOUs. If such foreign capital increasingly moves elsewhere and easy credit disappears for consumers, U.S. interest rates could rise sharply. As a result, many Americans would likely experience a major decline in their living standards -- a gradual grinding-down process that could continue for years, as has occurred in Japan since the collapse of its credit bubble in the early 1990s.

Even if China, Japan, and other East Asian nations continue to accommodate American financial profligacy, a major economic "adjustment" in the U.S. could still be triggered simply by the sheer financial exhaustion of its overextended consumers. After all, the country already has a recession-sized fiscal deficit and zero household savings. That's a combination that's never been seen before. In the early 1980's, when the federal deficit was this size, the household savings rate was 9%. This base of savings enabled the government to finance its vast deficits for a time through a huge one-time fall in net savings, the scale of which was historically unprecedented and not repeatable today in a savings-less America.

http://www.worldproutassembly.org/archives/2005/05/a_tour_of_econo.html

China - GDP 7 trillion
US - GDP 11 trillion

China pop 1.3 billion
US pop 300 million

China GDP per capita 5,300
US GDP per capita 36,600

They are poverty stricken. All they've got is manual labor. Now, how can they take over the world if they can't attract the brightest people. All they've got in that catagory is Hong Kong.

Poverty stricken they might be, but they're also coming out of it rather quickly. I expect the capitalists over there to soon tire of the government being so restrictive and will be more demonstrative in their disenchantment. Eventually the commie gov't will collapse, just as in the old U.S.S.R. and Yugoslavia. When that happens, China may really lose interest in overtaking others when there's so much to be had right inside their own borders. When they're making plenty of money trading goodies, why stop for making a war?

They want N. Korea ... and they owe Japan a little payback too.

Why would they want North Korea? That's nothing but a proverbial money pit. Yeah, they have issues with Japan, I just don't see them acting on those in the near future.

Nothing will stop China. PERIOD!
I'm sure the political prisoners in work camps across China find that a warming notion.

Poverty stricken they might be, but they're also coming out of it rather quickly. I expect the capitalists over there to soon tire of the government being so restrictive and will be more demonstrative in their disenchantment. Eventually the commie gov't will collapse, just as in the old U.S.S.R. and Yugoslavia. When that happens, China may really lose interest in overtaking others when there's so much to be had right inside their own borders. When they're making plenty of money trading goodies, why stop for making a war?

They will come out of it when the fully convert to capitalism. If you've noticed over the last few years, they are converting slowly, and only the capitalist sectors are the profitable ones.

Did someone mention war? I must have missed that; I don't think China has any reason to want to go to war right now.

Why would they want North Korea? That's nothing but a proverbial money pit. Yeah, they have issues with Japan, I just don't see them acting on those in the near future.

I meant to say Taiwan. I stand corrected.

Did someone mention war? I must have missed that; I don't think China has any reason to want to go to war right now.
If Taiwan declares formal independence, expect China to be all over them with military force.
They will come out of it when the fully convert to capitalism. If you've noticed over the last few years, they are converting slowly, and only the capitalist sectors are the profitable ones.
Those FTZs (free trade zones) are creating a constantly growing middle class, but still, as you said, the majority is destitute. Even so, China gaining wealth is not happy news for the US. I believe the proper term that applies to China right now is "Market Socialism" if one likes to be politically correct.

Mainland China has coveted Taiwan for decades. Taiwan surely won't give up without one helluva fight.

... but with the internet they can still see the type of living that we have over here in the US...
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WindWhip, I am not sure how much it will come into play but the lady was on T.V that set up Yahoo for China and she said it was not like ours.
She said that when the internet is set up for countries like China it is very limited on what it can access. Much is local to the country.

According to what I heard, the internet that they access is not the same unlimited www that we access.

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WindWhip, I am not sure how much it will come into play but the lady was on T.V that set up Yahoo for China and she said it was not like ours.
She said that when the internet is set up for countries like China it is very limited on what it can access. Much is local to the country.

According to what I heard, the internet that they access is not the same unlimited www that we access.

You're absolutely right. Look at the differences when you type in Tianamen Square in China - http://blog.outer-court.com/archive/2006-01-27-n42.html

The thing is that they can still access our internet by linking to an outside line - for instance they could have their modem relay the internet from the US to their computer - oldschool, but it would work.

If Taiwan declares formal independence, expect China to be all over them with military force.
Ah, yea thats true. I can't believe that there wasn't more protesting against the anti-succession bill. I've got some friends over in Taiwan, and they hate China with a vengeance.

China pop 1.3 billion
US pop 300 million

China GDP per capita 5,300
US GDP per capita 36,600

They are poverty stricken. All they've got is manual labor. Now, how can they take over the world........


Errrm....no one mentioned *China taking over the world*.

What IS pertinent is that America's major foreign creditors --like Japan and China-- pretty much hold America's debt ridden economy in the palm of their hand.

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As one of America's largest foreign creditors, China naturally has the upper hand today, like any banker who can call in a loan when he sees the borrower hopelessly mired in IOUs. If such foreign capital increasingly moves elsewhere and easy credit disappears for consumers, U.S. interest rates could rise sharply. As a result, many Americans would likely experience a major decline in their living standards.

Well, they did say no one can stop China; I was referring to an economic take-over, not a military one.

What IS pertinent is that America's major foreign creditors --like Japan and China-- pretty much hold America's debt ridden economy in the palm of their hand.
Elaborate a little on that one. How is our economy in their hands? What can they do to ruin us?

Elaborate a little on that one. How is our economy in their hands? What can they do to ruin us?

I posted it previously. America is DEEP in debt, and the Asian nations who are SO heavily invested in this country are in the position of a banker holding some yokel's note; they can call it in whenever they like.

http://www.worldproutassembly.org/archives/2005/05/a_tour_of_econo.html