If I see one more expert say that China has to continue to loan the US government money because otherwise the results are bad for them, I'll scream. That is ridiculous logic. It's like saying the Titanic couldn't sink because it didn't have enough lifeboats. Let's put this stupidity to bed once and for all.
First, the Chinese have nearly stopped lending us money. Second, they've warned us that they are not lending more. Third, they've warned us many times that the course we're on is "reckless," irresponsible." and "endangering the world economy." So, they don't think much of Obama's and Bernanke's plans. So the idea that they can't stop is silly, since they already pretty much have.
Also, think about this scenario. You have loaned your friend a bunch of money. He keeps asking for more. You are getting increasingly concerned about his ability to pay you back. He knows you're worried so he says, "Just loan me another $5,000 and I'll get you paid back in full next week." The next week he asks for more, and the next week asks you for more. Do you continue to loan him money in the hope of getting all of it back someday, or is there a point at which you might stop?
Of course there is a point at which you would stop. That is the point at which you decide that no matter how much you lend, it won't help and you won't get your money back. On the day you're sure that more won't help, you'll stop. It's that simple. The Chinese aren't the Red Cross giving emergency humanitarian aid. They are hoping to come out ahead. When hope of that is gone, they'll stop. And they virtually have.
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