Reality Check

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." Read more...

I wonder what might happen if Washington were to NOT honor its words and hurt the Chinese economy and government. Would they consider that worthy of a military retaliation? Would our government - if it were in a position to default on those treasuries - be able to field an army if it were that broke? Or would the Chinese merely use it as an opportunity to attack Taiwan to bring it back under the authority of the homeland? The US certainly couldn't do anything but yell and scream if they did under those circumstances. And if China "annexed" Taiwan what are the chances that Russia would maintain its borders? And what about Venezuela? And Iran? Things to be considered.