We are fiddling while Rome burns. There is an enormous crisis looming and Bush is driving us toward it as fast as he possibly can. The crisis will be an incredibly powerful weapon that can be used against america, and will cause more damage to this country than a thousand attacks like the one on the world trade center. The weapon is our debt. It is massive. $7.7 trillion dollars. As anyone knows, the bankers can pull the rug out from under a debtor at any time.

In 2004, the United States imported a record $617.7 billion more than it exported, a 24.4 percent increase over 2003. The annual deficit with China was $162 billion, the largest trade imbalance ever recorded by the United States with a single country. Equally important, as of March 9, 2005, the public debt of the United States was just over $7.7 trillion and climbing, making us easily the world's largest net debtor nation. Refusing to pay for its profligate consumption patterns and military expenditures through taxes on its own citizens, the United States is financing these outlays by going into debt to Japan, China, Taiwan, South Korea, Hong Kong and India. This situation has become increasingly unstable, as the United States requires capital imports of at least $2 billion per day to pay for its governmental expenditures. Any decision by Asian central banks to move significant parts of their foreign exchange reserves out of the dollar and into the euro or other currencies in order to protect themselves from dollar depreciation will likely produce a meltdown of the American economy.

On February 21, 2005, the Korean central bank, which has some $200 billion in reserves, quietly announced that it intended to "diversify the currencies in which it invests." The dollar fell sharply and the U.S. stock market (although subsequently recovering) recorded its largest one-day fall in almost two years. This small incident is evidence of the knife-edge on which we are poised.

Japan possesses the world's largest foreign exchange reserves, which at the end of January 2005 stood at around $841 billion. But China also sits on a $609.9 billion pile of U.S. cash, earned from its trade surpluses with us. Meanwhile, the American government insults China in every way it can, particularly over the status of China's breakaway province, the island of Taiwan. The distinguished economic analyst William Greider recently noted, "Any profligate debtor who insults his banker is unwise, to put it mildly. ... American leadership has ... become increasingly delusional - I mean that literally - and blind to the adverse balance of power accumulating against it."

From Wake Up! by Chalmers Johnson.
Published in the current issue of In These Times.

If the nations who hold our debt decide to, they can destroy the American way of life without firing a shot. They can do it slowly, with usery interest, basically making us slaves to the debt, or they can do it quickly, in preparation for their own was for oil, resources, etc.