Paying the Piper

On today's news it was reported that CHina is threathening to sell off its huge ($407 billion) US treasury reserves unless the US backs off efforts to stem trade deficits. Duh!! What did people think they were going to do with all that cash? Political blackmall it is called. Just the mention of it sent credit markets and stock markets haywire.

What is the US to do? For one thing, begin weaning itself of Chinese interests. Less imports from China and more exports. Begin a Made in USA campaign. Strictly enforce food, health, safety,labor standards for imported goods. Just because it is made in China does not give it a pass. Lead Paint. Tainted food, etc. We must crack down. Chinese manipulation of their currency should not be acceptable and arm twisting should be made to bring the rate into more acceptable range. Remember, trade is a two way street. If the Chinese wish to wreck havoc in our financial markets, they may start a recession but in doing so will cause a drastic decrease in imports from China, probably causing a similar recession there. If hardball is what they want, give it to them. We are in much better shape than they are. We buy their goods, we can always stop buying shirts and toys.
Punitive tariffs on items whenever possible; increase the delivered cost and demand will go down.

It is great to live on borrowed time or borrowed monies. But sooner or later the piper will come to collect. And that time has come.