The ever-readable Mickey Kaus has some good insight
Escape from TimesSelect: The NYT’s Tom Friedman, in an exceptionally blowhardish appearance on Meet the Press, laments the effect of massive U.S. borrowing from China:
I think we have–we are now in a position where China has– they’re heading for $1 trillion, OK, of our–in reserves that they’re going to be holding, basically. And the leverage that is going to give China over the United States in the coming years, God knows where– how that’s going to play out.
Hmm. If you lend a trillion dollars to someone, does that give you leverage over them or them leverage over you? I’d always thought it was the latter, especially when the debtor is a sovereign nation. (Keynes: “Owe your banker 1000 [pounds] and you are at his mercy; owe him 1 million [pounds] and the position is reversed.”)
It’s worth noting that the Chinese (and whoever) are gambling on the US Government keeping it’s word and paying back all of their debts, which seems a bit iffy.