The United States posted a $65.7 BILLION trade deficit in February. The U.S. hit a record high [or low, depending on how you frame it] in January with a $68.7 BILLION trade deficit. The end of 2005 net trade deficit was $723.6 BILLION.
China posted an $11.19 BILLION trade surplus for March, doubling the surplus from March of 2005.
That's a lot of money to make up. And we're digging deeper into debt to China every day. When they call in those loans, whether in physical cash or political power moves, it's going to be really ugly.
Why do you assume there will come a time when "they call in the loans." In college I played backgammon against my roommate nearly every day for a year. There were times when he was way up and times when I was way up, but at the end of the year, we were so close to being even that there was no "calling in" of bets. Couldn't that be what happens here?
China Law
Posted by: China Law Blog | April 12, 2006 at 02:48 PM
I am not sure, like China Law, that they will ever call in the loans. But certainly in this time, where the balance of power is shifting rapidly in the world, such a debt can be dangerous to carry. Already, China has shown strong overtures towards alliance with Russia. If this continues, and especially if the two decide to ally with the Middle East, leaving ourselves open to owing money to our enemies is a dangerous game. Unfortunately, the US has shown no foresight in this area.
Posted by: scottage | April 12, 2006 at 07:27 PM