During the recent Debt Ceiling debate
, U.S. diplomats were vigilant in trying to convince China they had nothing to worry about: the debt ceiling will be raised and America will not default on its foreign-held loans. This should have been reassuring news for the Chinese, which by some estimates hold hundreds of billions
, if not trillions in U.S. loans. But was it, and how could Facebook possibliy fit into this equation?
To put this in perspective, when the graphic novel satire, "Facebucks & Dumb F*cks
" was written in late 2010, the debt ceiling was only $13 trillion. Today, it is fast approaching $14.4 trillion as the clock ticks away at a final vote to increase it.Page from Facebucks & Dumb F*cks graphic novel
"China is not going to be the biggest loser here," World Politics Reviewer's
Daniel McDowell told Trend Lines. "The U.S. is supposed to be the world's leading economy. It's supposed to lead, and this looks very irresponsible," said McDowell. He noted that the ongoing failure by Washington to resolve the current impasse provides China with the opportunity to remind the world, "'We are the victims because we hold a huge portion of U.S. debt, and we're behaving responsibly.'"
A U.S. default would be almost as catastrophic to the Chinese as it would be for Americans. Holding so much of our debt, the reality is that China doesn't really have any options to make a move. Since its economy is structured around export-led growth, and it has a large trade surplus with United States, McDowell made point that that it needs to "keep the dollar-yuan exchange rate stable." And China is even less likely to suddenly begin dumping its T-bills because doing so would devalue the U.S. debt they still held.
So if China is a not a winner in this scenario, and ends up being a willing and necessary accomplice in maintaining America's credit rating worldwide, does anyone come out a winner in this scenario?
Well according to the creators of "Facebucks & Dumb F*cks
," they see this as an opening for a social network the likes of Facebook (aka Facebucks) to make its move onto the global Facebucks Credit
stage (for more on this theory, see my previous post, "Could Social Media Currency Replace the Dollar, Euro or Yuan?
"). With their billions in assets, could it be a possible for a private firm to establish a new monetary system (e.g Facebook Credits) to replace our existing financial institutions? Highly unlikely, but it gives one pause to wonder if a new world order is in its early evolutionary stage. UPDATE - Poltico - August 3
- As a result of the passing of the Debt Ceiling bill, the Dagong Global Credit Rating Company, China’s top credit rating agency (which had already downgraded the
United States from AAA to A+ in November after the Federal Reserve
loosened its monetary policy), said that was now lowering the U.S.
government’s rating further, to A.Page from Facebucks & Dumb F*cks graphic novel