Chimerica

That's what one expert calls the umbilical link between Chinese cash and reckless borrowing by Americans that helped spell doom for the economy. Mark Landler has a complex but helpful (I think I understood it!) primer in the New York Times, part of the paper's seeming effort to lay as much blame for our crisis as possible at the clay feet of free marketeers at the Fed and in the Bush Administration.

In such articles, there's never much if anything about the irresponsibility of individuals who bought more house or more stuff than they could afford. It will be the government's job to save us from ourselves in the future, I guess, through improved economic manipulation and social engineering.

Landler's article started off sounding like a call to get mad at the Chinese. Better not, since, having allegedly helped cause the recession, they'll also be financing the recovery:

For China, too, this crisis has been a time of reckoning. Americans are buying fewer Chinese DVD players and microwave ovens. Trade is collapsing, and thousands of workers are losing their jobs. Chinese leaders are terrified of social unrest.

Having allowed the renminbi to rise a little after 2005, the Chinese government is now under intense pressure domestically to reverse course and depreciate it. China’s fortunes remain tethered to those of the United States. And the reverse is equally true.

In a glassed-in room in a nondescript office building in Washington, the Treasury conducts nearly daily auctions of billions of dollars’ worth of government bonds. An old Army helmet sits on a shelf: as a lark, Treasury officials have been known to strap it on while they monitor incoming bids.

For the past five years, China has been one of the most prolific bidders. It holds $652 billion in Treasury debt, up from $459 billion a year ago. Add in its Fannie Mae bonds and other holdings, and analysts figure China owns $1 of every $10 of America’s public debt.

The Treasury is conducting more auctions than ever to finance its $700 billion bailout of the banks. Still more will be needed to pay for the incoming Obama administration’s stimulus package. The United States, economists say, will depend on the Chinese to keep buying that debt, perpetuating the American habit.