Summaries and snippets from ‘Oh yes, it can happen here.’
The optimistic view:
1) The US can always print more money.
2) The US needs China and China needs the US.
3) The US anchors the world economy.
[I]f the Bush administration succeeds either in making permanent his major tax reductions (most of which sunset after 10 years), or in adding $2 trillion of borrowing to privatize Social Security, the fiscal situation would go from merely disastrous to catastrophic.
As the US trade deficit approaches a staggering 7 percent, it’s not clear how much longer foreign investors will keep investing in dollars and dollar-securities, such as corporate stocks and government bonds.
In a future crisis involving the tense China-Taiwan relationship, the Chinese ambassador suggests to Secretary of State Condoleezza Rice that maybe the United States would like to move its warships 500 miles away from Taiwan. Rice demurs. The next day, the Bank of China sells a few –just a very few to get our attention — US Treasury securities. Money markets reel.