The Asia Pacific Economic Cooperation Summit in Bali was graced by the presence of Secretary of State John Kerry, a stand-in for Barack Obama, who decided to stay home so he could refuse to negotiate with the GOP-led House of Representatives.
Kerry reassured Asian leaders that the Obama Administration will still be committed to doing business with Asia after the government shutdown ends in the near future. He said, “No one should mistake what is happening in Washington as anything more than a moment in politics. We’ve all seen it before and we’ll probably see it again. But I guarantee you we will move beyond this and it and we will move beyond it with strength and determination.” He joked, “In 2004, obviously, I worked very, very hard to replace a president. This is not what I had in mind.”
Kerry said of the US-led Trans-Pacific Partnership, “At a time when all of us seek strong, sustainable growth, TPP is creating a race to the top, not to the bottom,” he said.
It’s no wonder that Kerry and Obama are so eager to please their Japanese and Chinese compatriots; as of October 2012, China held $1.15 trillion in U.S. bonds of the roughly $17 trillion U.S. federal debt, and Japan owned $1.12 trillion of it. If either country decided to dump the U.S. treasuries they own, the burden of servicing the U.S. debt would trigger a currency crisis, thus raising interest rates, which would cause a recession.
It’s not out of the realm of possibility; one senior editor of the Chinese government’s China’s People’s Daily wrote, “now is the time for China to use its ‘financial weapon’ to teach the United States a lesson if it moves forward with a plan to sale arms to Taiwan.” The China Times reported China’s central bank deputy governor Yi Gang saying, “China is fully prepared for a looming currency war should it, though ‘avoidable,’ really happen.”