■"Foreign Interest Appears to Flag As Dollar Falls," by Edmund L. Andrews, New York Times, 27 November 2004, p. B1.

In PNM, I wrote that although weíre the worldís sole superpower, there is a way for the rest of the Core to ìvoteî regarding our employment of that awesome power, and itís called being willing to buy our debt.

Right now the rest of the Core is voting no:

Investors and market analysts are increasingly worried that the last big source of support for the American dollar - heavy buying by foreign central banks - is fading.

The anxiety was on full display Friday, when the dollar abruptly slid to a record low against the euro after a report suggesting that the Chinese central bank might start to reduce its holdings in the American currency.

Though Chinese officials later denied the report, and the dollar recovered, analysts say the broader trend is that foreign governments are becoming less willing to finance the growing debt of the United States government.

On Tuesday, a top official with the Russian central bank said his government had become worried about the sinking value of the dollar and might switch some foreign reserves to euros.

A day later, India's central bank hinted that it was worried about the same issue and might shift some reserves into other currencies.

Japan and China, which together have amassed nearly $900 billion in United States Treasury securities, have both slowed their buying sharply from the frenetic pace in February and March.

"There is an emerging consensus that banks around the world are moving to expand their reserves of euros at the expense of dollars," said Laidi Ashraf, chief currency analyst at MG Financial Group in New York.

The Bush administration is going along with the dollarís decline because it makes sense economically, as does pushing China to make the yuan convertible, but the effect of both efforts will be to dramatically dry up the pool of foreign governments willing to keep buying up our debt. Our current accounts deficit is such that we need to attract $2b a day to maintain our overall deficit spending, a good portion of which is driven by our military costs in this Global War on Terrorism.

American can afford its current Leviathan force, but it cannot afford to self-finance the bulk of the follow-on SysAdmin work that will ensue from efforts like our recent takedown in Iraq. The coming renegotiation of that security burden is inevitable, otherwise youíll see American withdraw dramatically from the world militarily.

Admitting that strategic reality is the first step toward making the deals weíll need to make if weíre going to get truly serious about waging a Global War on Terrorism that will clearly last decades.

There is no alternative.