The debate in Congress rages this week about President Obam
a’s $815 billion stimulus package and yet the most important question is not being asked:
Who is going to own America?
The debt that Americans are being asked being asked to assume, which could amount to many trillions of dollars over the next 20 years, is obviously going to be fronted by creditors with deep pockets.
So who exactly are they, these creditors? The American citizen? Nope. American citizens don’t have that kind of money. The government?
t itself? No, it does not have that kind of money on hand. Then who does?
The answer is foreign governments. And among those governments are those whose agenda may not necessarily embrace the life, liberty and happiness of the average American taxpayer.
In short, Russia, China and Saudia Arabia are about to become America’s somewhat suspect sugar daddies .
These governments, in case you don’t know, already own trillions of dollars in U.S. treasury bonds. Should we be offering them even more? It is very much like placing bars on your windows to deter the thief and then leaving the front door key under the mat for whenever he feels inclined to enter your home.
To be fair, it has been argued (and quite convincingly) that these nations have a vested interest in propping up the American economy. For while the U.S. citizenry accounts for less than 5% of the world’s population, it accounts for 25% of global GDP. That makes the U.S. market place, with its enormous potential for consumption, the trough from which the rest of the world feeds. Would these nations, asks the economist,really sever the pipeline which provides them with their own source of nutrition?
The answer most economists give is no. These nations, they claim, have signed on for a life long, no-going-back adventure with the American economy. Never again will they have recourse to their capital. Never again will they indulge in the dream of buying up major American properties or other assets with their profits. When their treasury bonds come due, the only thing they will be able to do with the money is buy new bonds. In this scenario they are not loaning money at all. They are investing in the American economy in perpetuity.
The trouble with this picture is that the potentates of Moscow, Beijing and Riyadh may have a somewhat different understanding of their role in our future. As Frank Gaffney points out in his book War Footing ( an AFA recommended book of the month), China is poised for a military confrontation with the United States some time over the next twenty years and all its economic planning, military posture and foreign policy maneuverings are geared towards that eventuality. Russia, almost needless to say, has re-entered world politics convinced that it deserves recognition and respect as a great power and is making a determined effort to restore 19th Century style balance of power politics – at the expense of the United States. Saudia Arabia has been the international financier of the global jihad for at least 30 years and despite the fondness of its leaders for Western styled luxuries, is pretty well committed to the West’s destruction.
Some sugar daddies.
So what if the projections are wrong? What if instead of recognizing the virtues of interdependence the leaders of these countries embark on a meglomaniacal drive for world domination? Do these much vaunted economic safeguards really clamp the vault shut on their global ambitions?
Israel learned about top heavy ownership of its economy the hard way. In the 1990s, seeking to free itself from its economically suffocating socialist heritage, the government began to sell off huge chunks of its communications, banking and transportation sectors. But this privatization process soured when it was realized that the buyers of these plum assets would be cash -flush Israeli companies who could build virtual monopolies with all the goodies they could now collect at auction. Today the Israeli economy is in a sorry state because of it, with 65% of the country’s assets controlled by only 18 families. It is this oligarchy which essentially rules the country, effectively asphyxiating the political culture and disempowering the citizenry.
The danger in owing your economic survival to the good graces of people who despise you, cannot be underestimated. Not all nations act rationally; not all leaders are honest about their intentions; not all care even about their own long term survival (witness our dear friends among the mullahocracy in Iran).
Before committing to a prescription of debt recovery medicine, it might be best, then, to determine the credentials of our doctors. Are we, in the end, being advised to quaff medicine that will make us well? Or are we being duped into drinking a decidedly unhealthy poison?