Symbiotic Dysfunction

So China is talking about being "worried" about all the US Treasury bonds they're holding. I'm sure they are, at some level. And I used to be extremely concerned about this as well, until it was basically explained to me that China has little choice. In a collapsing world economy, there is not much recourse for a safe place to drop your cash other than US securities. In addition, Chinese exports are plummeting, and they actually need to keep America flush with money to keep buying their goods. President Obama basically said this today, albeit not using those words.

“There’s a reason why even in the midst of this economic crisis, you’ve seen actual increases in investment flows here into the United States,” Mr. Obama told reporters. “I think it’s a recognition that the stability not only of our economic system but our political system is extraordinary.”

He added, “Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States.”

That sounds jingoistic, but it happens to be true. Obama is simply saying that China has nowhere else to go.