ChinaStakes.com:

The nature of the current global financial crisis is the biggest debt crisis in America’s history. The issuer of the world’s reserve currency, the US has been borrowing for quite a long time without any limit. America’s trade, international payment and fiscal deficits have existed for over 40 years

To relieve the crisis, the US must repay its debts, and to do that it needs to live a more frugal life instead of asking others to continue lending it the money to maintain its over-consumption.

But if the US must ask China to buy some portion of its national debt, what kind of conditions and principles should China we raise?　　

The principle should be the same as the basic principle upheld by the US and IMF when “saving” other countries in crisis: cut fiscal disbursement and both the government and the people should save money. Besides that, there are six points: first, the US should cancel the limits on high-tech exports to China, and allow China to acquire advanced technology and high-tech companies from the US; secondly, the US needs to open its financial system to Chinese financial institutions, allowing all Chinese financial firms to open branches and develop business in the US; third, the US should not prevent Europe from canceling the ban against selling weapons to China; fourth, the US should stop selling military weapons to Taiwan; fifth, the US should loosen its limits on numbers of Chinese tourists and allow them to travel freely to the US; and sixth, the US should never restrain China’s exports to the US and force RMB appreciation in the name of domestic protectionism and employment pressure.

My comment: I wonder if the right wing religious extremists in the US are familiar with Proverbs 22:7 "The rich rule over the poor and the borrower is servant to the lender". This type of thinking is building momentum in China as I am seeing more articles like this and others advising the government to diversify its foreign exchange holdings into gold and other commodities. The realization is slowly but surely sinking in with our creditors that we are broke and that we will not and cannot pay back our debts. The Chinese are beginning to understand that they have been had and the tide is starting to turn. How much sand is left in the vendor financing hour glass is the big question for the US consumer and government. Demands by the Chinese population for jobs and continued economic progress in China will force China to spend its wealth in China for Chinese citizens rather then subsidizing US consumption. That is the paradigm shift I think most people are missing.

John Polomny
The Real Deal