re: #446 yesandno

Who can blame the Chinese for stopping their lending to us? We borrowed heavily from them to finance the Iraq War and counterinsurgency. They ended up holding hundreds of billions of dollars in toxic U.S. mortgage paper. They got badly burned. Their own economy now is tottering.

Without their extensions of credit, there isn’t enough credit to jump start the U.S. economy except by inflating. That may explain why Geithner won’t flush the toxic paper the banks are holding. If that information is exposed, several more large banks fail, setting off an additional panic.

They don’t know what to do! What they should do is suck it up, flush the assets, and take the hits. That lays the foundation for a recovery, because everyone knows the bad paper is gone.