As every American in financial trouble knows, itâ€™s never good when your creditors start asking questions. Well, today, the United Stateâ€™s biggest creditor grumbled about our current spending.
China’s premier didn’t say it in so many words, but the implied warning to Washington was blunt: Don’t devalue the dollar through reckless spending.
Premier Wen Jiabao’s message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington’s biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.
“Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference Friday after the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
This reminds us of a very real fact behind the stimulus: we wonâ€™t get many, if any, do-overs if the package doesnâ€™t work. Before we even hit this crisis, our debt was astronomical. As China is hinting, we shouldnâ€™t count on being able to push that debt much further.
Sometimes I worry that politicians on both sides see our national debt as nothing more than an accounting nuisance. They never seem to concern themselves with how much of our future GDP will be sacrificed to nations like China once our debts become due. But those debts will become due and, as China reminded us today, our creditors are keeping a close eye on our financial strength. Letâ€™s hope weâ€™ll pull out of this recession stronger than ever so that the debt in which weâ€™ve put ourselves never becomes an insurmountable problem.