Sunday, June 26, 2005

The US/China embrace

This is a weird situation: China's past willingness to buy up "low yielding debt paper of Fannie Mae and the other agencies fueling America's housing bubble" has postponed the (hopefully slow) downhill slide of the US economy while foolish US consumers who mistake cheap credit for personal wealth fuel the short term success of China's economy.

There are very real risks to both China's and the US's individual economies - the fact that our economies are so tightly coupled (tight coupling is bad in software also :-) is something to keep more than a casual interest in.

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