Last week the Chinese warned the Obama White House that they "hold significant debt of the United States" . We can only hope that nobody forgets that China owns owns $1.28 trillion, that they admit to. They have beneficial ownership of a good deal more, but if we think of money as stock, they have as much influence over the U.S. as a share holder with 10% ownership of a company's stock.
Two years ago China made almost the exact same worded warning when Congress was debating what imports to tax. Then, they raised the price of their currency, at a time when we were trying to get them to lower it. So, what is next from China on this? You can bet the backchannels are humming, and the emphasis is on getting the debt debate over with, so they can back-fill their pockets with new payments. The debt ceiling debate is not about what bills we owe; it is just as much about who we owe that money. I am uncomfortable about China, though less so about Japan, owning equal chunks of our debt. Don't we care, or like the Obama White House, do we think China is our friend?
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