$1 Trillion is Chump Change

When conservatives and Libertarians alike get exercised about the U.S. budget deficit, they often throw out a $1 trillion figure. The U.S.now has an annual budget deficit of $1 trillion. And it is true. 
But if that numbers scares you, then what does $9.5 trillion do to you? You see, $9.5 trillion is the number that really sums up just how much of a national security problem the U.S. has when it comes to the national debt. According to the U.S. government's  Bureau of the Public Debt, the U.S. this year must sell $9.5 trillion of bonds to account for the new debt the government adds to its books and to refinance the debt that is maturing. Everybody forgets about the debt that must be refinanced. 
We forget at our own peril. Think about how enormous $9.5 trillion is. Each year the federal government must conduct auctions where they find willing buyers for $9.5 trillion worth of U.S. debt.
What would happen if bond buyers suddenly started demanding higher interest rates to buy those $9.5 trillion worth of bonds? Worse, what would happen if China -- the leader of the bond buying pact -- decided to stop buying U.S. bonds for awhile? 
Worse yet, what if China decided to stop buying U.S. bonds not for financial reasons, but for geopolitical reasons? 
In a world with nuclear weapons, two superpowers will never again fight a conventional war. But that doesn't mean the world's superpowers will forever get along. Wars can be fought in many ways. The Chinese Banker is about highlighting the dangers of "financial warfare." We'll have much more on that later, but for now remember this: $9.5 trillion is a mighty big weapon pointed at the U.S. economy. 
If your curious how messy a financial war between the U.S. and China would get, read my new novel, The Chinese Banker. It is available at www.amazon.com/author/dustinhill. 


All right, it is time for our Banker News Byte, where we highlight U.S.-China financial matters that may be slipping under your radar. 
Today, what's our banker doing working with these guys? A major developing story about Chinese involvement with Iran. 
http://www.thesmokinggun.com/documents/fbi-probes-zte-iran-deal-645912

Know Thy Banker

Nearly every business owner has received that piece of advice at one time or another. Well, here's a question: Should such advice apply to countries too? Should America know its banker?

I'd say when you spend  roughly $1 trillion more than you make, it probably is an excellent idea to know your banker.

In America, there's no doubt the country's leading banker is the Chinese government. The Chinese government directly owns about $1.2 trillion in U.S. debt.

Think about what would happen if the U.S. got a call from its banker and was told its $1.2 trillion line of credit had been revoked. What would be the aftermaths?

Those of us here at The Chinese Banker got to thinking about that very subject in 2008 when the world was standing at the edge of a financial cliff. We tried to imagine what would falter, what would crumble and who would be left standing. Finally, we wrote it all down and it became The Chinese Banker, a novel of an America ravaged by a Chinese-induced financial crisis.

I hope you check the book out on www.amazon.com/author/dustinhill.  But I also invite you to check this blog on a regular basis, and subscribe to our completly free financial news service on U.S.-Chinese relations. Simply like our facebook page at www.facebook.com/TheChineseBanker.

Nearly every weekday, we'll offer you a daily news tip. We call it our Banker News Byte. We search through interesting news items of U.S.-China financial matters, and pass along the one that may have slipped under your radar screen.

So, let's get to it. Let's get to know our banker -- even if it scares the hell out of us.

Here's today's Banker News Byte:

A rivalry is not exactly what you want to have develop with your banker, but the U.S. and China certainly have on brewing. Southeast Asia is ground zero for the tensions at the moment:
http://www.gmanetwork.com/news/story/264785/news/world/booming-southeast-asia-in-a-quandary-over-us-china-rivalry