Dollars and No Sense

I've often said Leftists aren't good with an economy because they don't understand the basics of economics. This was made abundantly clear recently with a quiet little event that caught very little attention.

The EU's economy is tanking as badly as ours is. To help matters, America is sending money to some of the EU's banks as a means to help them along. Of course, the first big question is where we are going to get the money since we're still recovering from our own economic downturn. The short answer is...we don't know.

There's another question that should concern us all. As we've seen, the dollar has been losing its value in recent years. While the Left said it was bad under George W. Bush, the Left has said it's great under Barack Obama because a weak dollar stimulates trade by making our products cheaper. However, no one will be forced to buy our products, even if they are cheaper because it's a free market. People have a vested interest in buying products at a lower price, but they're not bound to it.

Now, for the question. What impact will a weak dollar have on the money we're sending to the EU? The answer lies with the Chinese. Right now, China owns a lot of our debt, due to the political and economic bungling of both President Bushs, Bill Clinton, and now Obama. By granting Most Favored Nation status to China, we've given them access to our economy.

And here's the punchline, kids. China will use that against us.

At any time, China can call in our debt, meaning we either need to pay them in full or they essentially own us. And they have told us to watch our spending in recent months. Extending a monetary helping hand to the EU isn't exactly being miserly, especially considering how poorly the dollar has fared against the Euro.

Now for the question. What would happen if China decided to call in our debt after floating a loan to the EU?

The short answer: nothing good.

The longer answer: it would ruin two major global economies, leaving China as a sole economic superpower. America would be unable to pay its debt to China and unable to pay its loan to the EU. The latter, in turn, would cause the EU's economy to continue its death spiral until it either pulled itself together and pulled out of it or crashed and burned. The instability of the EU right now makes the latter the more likely outcome. China will have beaten us and the EU without even firing a shot.

So, does anyone else want to rethink our generosity to the EU?