But, the U.S. possess the option of not paying on it obligations. The so-called "Ace up the sleeve". In view of the current financial situation in the U.S. where the Feds are fervently trying to shore up confidence that it will not default on its international obligations, even if it means that the Feds are paying good , but nonetheless freshly printed T-Bills in exhange of tangible goods. This scenario provides the Chinese a market to dump their cheap consumer goods which is required to keep their factories humming at full capacity and their people employed and otherwise content, lest they remember that they are merely slaves toiling for nothing more than the hope of payment of U.S. debt instruments.

I submit that it would be much easier for the U.S. to, in the very near future, to declare a national bankrupcy with a resulting stay on collections than it would be for China to respossess all of its consumer goods that have already been shipped over to the U.S. and already injected into the stream of commence.

I do believe that the Chinese see it coming but that they are powerless to do anything about it since the U.S is such a large consumer base for their products.

So what would be the ramifications of such a declaration of insolvency. Would China require us to go on a "COD" payment plan where everything is paid in tangible currency instead of balance of trade credits and debits? I think not.

China can take all of our balance of payment credits and deficients but they cannot be used to nourish their citizenry. What we do have in our favor are these nifty but othewise highly sophisticated apparatus we call "cruise missiles". With enough cruise missles, we can essentially take what we want and need almost at will and on a whim.

So, would you really prefer to be in China's shoes and be owned $1.3 trillion or in the U.S. shoe's where we purportedly owe China $1.3 trillion? You don not have to study too long to figure this one out..

I would love to see the Chinese start demanding collateral for future buys of our debt. We will have to raise interest rate to attract any new buyer of our debt. We may have to sell the Chinese our oil and gas reserves and exploration rights as collateral. We won't be needing them anyway since we are leap-frogging to the Smart grid with wind farms and solar panels for our energy. We will also have electric cars. How about that?

As much as it would hurt me, I would rather see a showdown on the debt so that our government's ability to engage in grandiose socialistic adventure will come to a screeching halt.

China’s statement might have been just political posturing and pandering to countless interests. What is sad is that they have that power in the first place. However, China could be truly concerned about the long term affects of the debt and spending of the U.S. on the value of these bonds and the U.S. economy. For example, with the U.S. keep flooding the market with cash, the possibility of hyperinflation or deflation exist. Anything like this or any other economic downturns derived from U.S. economic polices could be what China is worried about.

They could be just as concerned as Conservatives about the decision Obama is making.

http://franklinslocke.blogspot.com/