China--our banker!?

I am an attorney, not an accountant and I usually write local stories. Nevertheless, let me start by saying being in debt is usually not good, although in moderation it is necessary for each of our households. The more you owe, the more your creditors can tell you what to do.

Well, we owe China 797 billion dollars so China gets to tell the USA what to do and where to go. Where else would all the stimulus money have come from, where else would bank, car and insurance company bailouts have come from. So long as China keeps the loans coming, we are in the money.

But wait.

We gotta pay it back plus we lose our leverage with China on all kinds of issues. How do you tell your banker he has egg on his tie? We pay China almost 90 billion dollars a year in interest payments. That is money that cannot go to poverty programs, schools, tax cuts, bridges, highways or infrastructure.

Now we are looking to spend much, much more, trying to insure everyone.

We are trillions of dollars in debt, and not only are we not trying to find ways to get out of debt, we are trying to find ways to spend and borrow more.

This is a non partisan article, by the way. Bush borrowed too much also, but there is no question that last year has accelerated the borrowing to unheard of levels.

The good news is that China has in investment in the U.S. now more than ever. They must now care how the USA manages its finances or the dollar and their investment will lose value.

If you invest in a home, you want to maintain and fix it up to preserve and increase its value. China must feel the same way about us. Also, China is concerned that we are getting into too much debt and to that end they have expressed more concern than have our powers that be. China does not want our dollar to fail or fall so they are advising us, in all likelihood, to be careful with our expenditures, because it will cause the dollar to fall.

We are probably getting more fiscally responsible advice from China than we get from the U.S. Congress and the administration.

Another piece of good news is that China may tell us to cut down our on spending because the more dollars we print, which are financed by China, the lower the dollar goes in value.

The bad news is that China is looking seriously at a new world currency, not the dollar. It is called the "yuan". Hmmm? I wonder whose currency that is. You guessed it, it is Chinese. The dollar is weak, gold is almost to $1100, and the yuan, at our rate of borrowing, is on the way in. If you want to keep the dollar, vote with the economy and the dollar in mind.