SPIT IN HIS EYE!!!

It’s midnight. Overcast, cold, you’re in a back alley and a loan shark has you by your unmentionables backed up against the wall with a knife to your throat. The most logical thing you could do would be to spit in his eye. Right?
Late last Friday President Obama did just that. For every one dollar of goods sold to China by the United States, we import $4.46 worth of Chinese goods. In 2008 the trade deficit with China was $268 billion. Additionally, China holds almost $2 trillion dollars of our foreign debt. Financially, we aren’t in a good position with them. Not a good time to be slapping them with tariffs; that’s just what we did when President Obama levied tire tariffs on China. Their response was hardly enthusiastic, and while initial plans for retaliation only include tariffs on U.S. exports to China such as automotive parts and chicken, some in China are calling on the government to “dump” their treasury bonds. If they do…
Maybe this isn’t that big of a deal. Maybe it’ll all smooth over. But this latest turn of events is eerily reminiscent of events in the past, events that precipitated major crisis and conflict. The one that comes immediately to mind is the Smoot-Hawley tariff of 1930, which spread the Great Depression to Europe. I’m not saying history will repeat itself; I don’t think it always does. But I’m not saying it won’t. I think at times like this it pays to be informed, ready for anything. President Obama has often referred to the recent months as a “crisis.” Characteristic of a crisis, anything could happen. Be informed. Be prepared. When/if fit hits the shan, we may be all we have.