According to your logic if you have a credit card debt the credit card company will never let you go broke and will keep increasing your credit limit indefinitely because if you do go broke they lose money.Quote from sputdr:
China has no central bank in a time of crisis they will get clobbered.
Now Japan and the US are China's biggest trade partners and also I believe the two biggest owners of US debt, therefore if the US fails Chinas two biggest trade partners have a financial crisis not to mention europe too.
To believe it won't get clobbered is foolish anyways.
The last asian financial crisis started in Thailand and rippled throughout Asia. If the Thai economy has an effect that big what makes you think the US failing wouldn't be catastrophic?
We are China's biggest trading partner or the 2nd but either way Japan owns a ton of our treasuries as well so if China's two largest financial partners had a financial crisis China would have a financial crisis and it would trickle right down to the 3rd world-ie brazil.
I think your common sense if blinded by your hatred for Bush.
It's not gonna happen anyways but you can always hope I guess.
China keeps a ton of green paper which it's not using. If the US economy collapses they will never be able to use this green paper and will probably burn it. Yes, just like any bad debt that will hurt, their finanical markets will be affected, they may have a recession etc but they will write it off, get over it and move on. They will have very little trouble finding other countries happy to take their goods and services and give them paper. We on the other side will become a banana republic.
You can't go broke by making more than what you're consuming and that's what China's doing. Even if you have to write off a bad debt you're still fine. On the other side you will undoubtedly eventually go broke if you consume way more than what you produce.