The Odd Couple – China & The U. of S.A. (January 12, 2009)

Felix “China” Unger and Oscar “Uncle Sam” Madison are living together in a symbiotic/parasitic relationship.  In recent years, some pundit types said that the economies of the world are “decoupled” from the United States.  Some other types were skeptical.  The economies always seemed “coupled.”

Those who argued that the U.S. no longer produces any goods for export do not recognize the toxic commercial instruments foisted on the world over the last half dozen years.  And the world bought it.  And bought them.

China produces the goods and the money to buy the goods.  The U.S. consumes the goods and the money to acquire the goods.  Projections about the Trillion dollar domestic bailouts spurring enough economic activity to drive the American economy and begin satisfying the growing national Debt are delusional.  The U.S. will never pay off its national Debt.  [See the e-ssay dated January 17, 2005 entitled “America the Bankrupt:  Economics 210 in the Land of the Freeway and the Home of the Wave.”]

How will China (and Japan, England, and other creditor countries) respond?  Is the U.S. “too big to fail” or more subtly “too intertwined to fail.”  What if no other country or consortium of countries is in an economic position to rescue the U.S. economy or forgive its debt in later years?

Bumper stickers of the week:

We are all in this alone together

China – Shop (and let your currency float)

USA – Stop (shopping despite what others command)

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