“I’m a little bit worried.”

China’s premier, Wen Jiabao

These were the words that China’s premier, Wen Jiabao, uttered last year when things were badly unraveling with the US credit crisis. It’s strangely refreshing to hear a candid portrait of current events from a head of state.  Refreshing and, frankly, worrying. What soon followed was a sell-off of over $30bn of US government bonds, and although this is a small portion of China’s stake in American companies, and the treasury – it, none the less signals a change in temperament from landlord to tenant. It says, “I don’t think you will be able to pay your back rent and I want to sell your stereo to a neighbor to reclaim some of what I’m owed.” And China is owed a lot of back rent from America!

Many analysts think it is premature to read too much into this, but others are reading the tea leaves differently.  Still, Japan and the UK are happy to buy US debt and are continuing to invest. But, one has to ask for how long? Another important factor is that China needs America to recover in order to help Chinese exports in the long term. To just sell off some of the debt will not help the value of other investments that the Chinese have in the US. It’s a delicate dance, but there is real concern, and not just in America, that the massive stimulus package Obama is planning is just another bill the US can’t afford.

What will replace the free market free-for-all ideology in the near future is uncertain but even the International Monetary Fund is questioning where it all went wrong. It seems the ‘market will take care of itself’ paradigm and mantra of low inflation may have been misguided (Alan Greenspan, apologize). Just don’t ever mention the words ‘government regulations’ when you are in America. It may be time, though, to utter the unutterable and as long as the word ‘socialism’ doesn’t get used, politicians can always re-brand it as, say, ‘policy making.’ That has a nice ring to it, don’t you think?