War with Your Creditor

We all know that we are a debtor nation to the tune of about $16 trillion. What most folk don’t understand is that the majority of that debt is owed to ourselves; our investors, future retirees (money borrowed from the Soc Sec fund). Most folk would say it was China, which is indeed the country we have borrowed the most from, about 8% of our debt. China is also decreasing its loans to us; $1.31 trillion in June 2011 and $1.16 a year later. We owe Japan almost as much $1.12 trillion.

Private US investors have about $1 trillion of our debt and mutual funds, insurance companies, and state and local government have about $2 trillion.

One of Obama’s complaints about the Bush administration was our debt with China driving national debt but he has not been able to slow the increasing debt.

In my opinion the whole debt issue is overblow anyway, we need stimulus to grow the economy so if that means increased debt for a while, so be it; despite the fear tactics of the conservatives. Economic history shows that is the way to go.

But all of this is a digression; something I am prone to do as you know, back to the issue.

Earlier I wrote that when debt gets so high to a country the debtor in affects have more control than the debtee as they can’t afford to loose their investment. Perhaps that is why we are seeing China reduce the U.S. Debt to them.

Here’s the point, the recent news that the Chinese government via its military seems to mounting a cyber war on the U.S. trying to steal corporate and government data and messing nastily with the U.S. economy. The logic of that makes no sense to me, but then I’m not Chinese.

Despite our differences the U.S. and China are aligned in many ways, especially economically. Their cyber invasion certainly does make for good feelings for in our business climate. The Mandiant security first has presented convincing data that China has mounted more than 100 such attacks of us; it is likely many many more. China says no, but the evidence seems most credible.

So what do you do when you seem at war with your creditors? Or perhaps it is just business as usual in economic communities where cyber espionage regularly takes place between countries and between business within the country. As Sir Walter Scot (not Shakespeare) said so eloquently, “O, what a tangled web we weave when we practice to deceive.”

My guess is that if we two countries were no so interdependent on each other one of those nasty drones might find its way to the military building from which the cyber attacks originate.

Oh well, cyber wars are not nearly as bloody so perhaps we should be happy for that. But if our retirement income ends up in the Chinese military I would be prompted to forget my non violent ways.