Damn it! It's the Chinese' fault, they save all their money after working their asses off, and out-competing us after stealing our industries, and then they have the nerve to send their hard-earned savings over here for us to spend like there's no tomorrow. Damn it, I say we markdown our debt to the Chinese, since it's all a communist plot! It's the butterfly effect run rampant on finance.
geopolitically - you might be on to something here. The Chinese don't want to empower their own consumers, they want to empower their state with vast infrastructure projects... I suppose they could learn a new way and try that out- forgetting the U.S and creating a buying atmosphere internally for their own consumer driven economy... but this will likely be a story that happens over a 25 year period... An excerpt from GaveKal's "Our Brave New World" gives a bit of insight (pg. 57) it goes on much deeper into detail: http://gavekal.com/eBooks/OurBraveNewWorld.pdf The US sits on top of an economic system whereas: a) The US consumer buys Chinese made goods for very little money and on which the Chinese producer makes no margin. b) The Chinese then take their hard earned US$ and buy overpriced US assets (whether US Treasury bills, the IBM PC Unit, etc.) Why should we be worried about someone who sells overvalued assets and buys undervalued goods? It seems smarter than doing the opposite. It would make more sense to be worried about the guy who sells undervalued goods to buy overvalued assets (i.e. China).