I'm not trying to insult you, pan. But your arguements are based on emotion and fear, not fact or data. I understand you are a very passionate person, an thats great, but a little bit of realism goes a long way. Economics is not about passion and emotion, its about rational decisions and arguements backed up by numbers. How is it rational for countries holding US treasuries to devaluate their own wealth? Its not. The only reason china, japan, or anyone else would sell their holdings US currency and for 50 cents on the dollar is if that currency was going to be worth 49 cents on the dollar the next day. Do you really see that happening? No one is going to artificially devalue the dollar out of spite or for the hell of it. Would you sell your investments at half price if you didn't have to?
I know you aren't a bush fan, but your worrying about the economy seems to be driven by your dislike of bush rather than the other way around. You cite reports on the economy from people who aren't economists. Your arguements sound like a Lou Dobbs episode. I actually had an assignment back in college to watch lou dobbs and point out where he was wrong and why. It was a long paper.
Will pointed out something that worries him
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In its August 2001 annual assessment of the world's largest economy, the International Monetary Fund (IMF) said "the yawning current account deficit raised the risk of a sharp depreciation in the U.S. currency."
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But if we look at the value of the dollar vs. the euro since 2001, we don't see a sharp depreciation. We see a mild depreciation (during a recession), but no bank-busting, depression-era devaluation of the dollar.
I agree that budget deficits year after year are bad, after all, that is our hard earned money we get taxed every week on paying for pork-barrel projects and interest on the national debt. Thats not something to be proud of. If we didn't have such a huge national debt the money going to pay the interest could go to a more productive use.
But when you think rationally about the current account deficit you see that the trade imbalance is not going to be the end of the US or her economic might. And thats not fantasy or wishful thinking, its pragmatism. When we have a current account deficit (read: trade deficit) we also have a capital account surplus, which means we have investments coming into the country. A capital account surplus does point to debtor status, but when someone invests in you, of course you owe them. But that is not inherntly bad. Investment is a good thing. Would you rather we didn't have investments coming into the country? Foreigners could invest anywhere, but they chose the US. Obviously, they must have faith they will get a good return, or else they would have invested elsewhere.
When you look at the state of the economy overall, the data doesn't point to us not being able to pay for these investments. We are a dynamic nation. We are inventors and innovators. Our economy is doing well and growing. Maybe I'm too bullish, but nothing I see points to another depression.