Teddy Roosevelt said "Speak softly and carry a big stick", presumably meaning (I think, anyway) that "actions speak louder than words..." or something like "if you have them by the balls, their hearts and minds are sure to follow."
George W. Bush's mantra would be something like speak incoherently and bellicosely and bluff the ability to back it up, and failing that, just say "9-11" a lot. Or something. And spend ourselves into oblivion against enemies who pose no threat to us, opposing any conceivable good government could do for all but the super-rich on "philosophical" grounds... and otherwise run government like a business. Unfortunately, if you're George W. Bush, the only "business" you "ran" was Arbusto (or perhaps Harken Oil)... businesses duly run into the ground... only when the United States is run as such a business, not even Daddy's friends have the money to bail it out.
Which takes us to a rather large group of Daddy's friends... around 1.4 billion of them, actually, a/k/a the population of China, which, in response to veiled threats at retaliatory action either by Congress or by the U.S. Treasury, has made a not so veiled threat to dump its (around a trillion dollars in) U.S. Dollar reserve holdings. In common parlance (or to quote a line from Ghostbusters), this would be "bad". The value of such holdings would decline, if they were dumped on the open market, and U.S. interest rates would have to go up to offset the devaluing currency, triggering a further erosion of housing and other asset values here, and... well, let's just say that it would be bad. Particularly if we were to say...
Let's juxtapose the story above (from the U.K.'s Telegraph, btw) with another story, this from Australia's (I didn't forget you, Rupert!) Wall Street Journal, discussing the coming credit crunch, fueled by the perfect storm of Alan Greenspan's irrational exuberance for credit expansion to make Bush look better than he should have in his first term (why St. Alan has been regarded as a genius rather than a partisan hack and a Randian idiot is a testament to some of the many things wrong with this country), the excesses of the sub-prime mortgage market, and a flood of foreign cash keeping our interest rates artificially low against our preposterous trade and government deficits, fueled respectively by SUV's and Walmart and tax cuts and Republican profligate spending... all of which, when "natural" (or at least inevitable) market forces react... will go the other way, and it is likely that lenders will make credit substantially harder to come by, both via higher interest rates, and probably, as in the S&L crisis, by refusing to make certain categories of loans at all.
In short, fasten your seat belts, it's going to be a bumpy ride. The Chinese, at least according to the Telegraph piece, are reacting in part to Hillary Clinton's somewhat aggressive stance that under her administration, we would not be as vulnerable to potential economic attack by countries like China. [The Chinese actually don't fear her; they know that their interests are aligned with Walmart's (i.e. keep selling us slave-made cheap-shit and often tainted tchotchkes, while piling up our dollars to have fun with us and our economy)... and they know damned well that Hillary was Walmart's lawyer (and a Board member, btw). No, no... their message is directed right at the Bush Administration, i.e., don't try to cover your failed bets everywhere else by messing with our favorable currency conversion rate. And to some extent, it's direected at more union-friendly candidates like Obama. (Query, of course, who might be looking out for our interests... well, keep querying... I'd sure like to know.)]
Anyway, the interesting thing from this... as you can see from last week's stock market jitters... is that there are some problems in some major economic fundamentals. For one thing, another crisis similar to the 1997 Asian crisis is widely perceived by Wall Street as not likely to be handled as well; Fed Chair Bernanke and SecTreas Paulsen are regarded as intelligent and competent men to be sure (as were the idiot Randian Greenspan and the legitimately intelligent Robert Rubin, back in the Clinton days).
The difference (and the problem) is... that's where it ends. In the late '90's, we could count on a competent cadre of professionals in finance and diplomacy to do the right thing. Now, beyond Bernanke and Paulsen, we have the man-child Bush and the deranged
Voldemort Cheney... and Incompetetentalleezza Rice. Meaning, a legitimate shock akin to the Asia crisis, and rather than have just a localized problem, we could well see a global downward cascade reminiscent of the kind we had in the 1930's-- a perfect storm of bad news (see above re: a simultaneous dumping of Chinese dollar assets when we have a financial crisis caused by the sub-prime market, hedge fund failures and other foreign investors pulling out).
Not to say this will necessarily happen... we are a bigger and bigger economy every year, with arguably more diversity than ever, and we are running at remarkably low unemployment. And the Saudis might do what they can to prop us up. But... most of our people are in debt, are heavily exposed to the real estate market which may be the first casualty, and don't have the kind of capital to slosh around to absorb serious shocks... the capital is mostly being sucked up by the super-rich (who by and large are "super" for their richness, rather than their generosity.) So who knows what's going to happen?
(If you have a few extra bucks lying around, you might want to consider having a few Euros lying around the house. You never know. Just saying.)
This has been: Imperial Hubris on Borrowed Money