China has a lot of ways to cause us trouble short of open war. In fact, I would say that there will never be open war with China, because they’ll just buy our leaders (in fact, I’d say key people were safely bought decades ago).
Which is also why we won’t walk away from our debt. One way they could cause us trouble is simply by not buying more debt. The moment they refuse to buy our debt we go into a tail-spin; they don’t have to stop, they just have to buy less and we’re in big trouble.
I have no doubt they have private assurances on Taiwan already. We’ll huff and puff and move a few carriers around the Pacific, maybe make a few impassioned speeches, but that will be the end of it.
They can trade their debt for equity and wind up owning large chunks of the economy. The saudis are already doing this, the Chinese are also doing this. So far they are buying key strategic companies, like specialty minerals, or companies that have access to key military technology.
I suspect that a big part of the bail-out was driven by the Chinese. The day they woke up and realized that the valuation of their bundled mortgages were in doubt, they probably called Bush and told him, make it right. And he and congress jumped through every hoop to make a big show of making it right. I also have no doubt that the Chinese have Obama’s ears on this subject.
“They can trade their debt for equity and wind up owning large chunks of the economy. The saudis are already doing this, the Chinese are also doing this. So far they are buying key strategic companies, like specialty minerals, or companies that have access to key military technology.”
True that! We have LOTS of collateral that can be seized - industry, real estate and countless natural resources.