posted on Dec, 1 2006 @ 12:08 AM
Pay back debts?
Trade deficits are an international bond. It gives other nations (China, India, Japan) incentive to continue to trade with the US so as to relieve
what stress they have placed on their economies by funding the US's line of credit. It does no good for China to say 'we do not need your financing,
factories, computers and chemicals'.
The same is true with European nations.
Who else have these countires to rely on for not only raw materials, as is the case with South Korea and Japan, but who else have the to rely on for
protection? It is either the US or Britain or at worse Russia if you choose, take your pick.
The accumulation of debt is essentially an accumulation of the garuntee that trade will not only continue but will be sustained for the far distant
and forseeable future.
Case in point: credit card debt. Lenders will not simply cut ties with a customer in debt because they do not pay the minimum. They work to help their
customers finance their debt, consolidate and seek other outside lenders. How else have the to make money?