ARTICLE: "Rate Rises Expose U.S. Foreign Debt As a Clear Burden: Net Payments Remain Small But Signal Growing Threat To Nation's Living Standards," by Mark Whitehouse, Wall Street Journal, 25 September 2006, p. A1.

ARTICLE: "Faster Pace By China On Rise In Currency," by Keith Bradsher and Steven R. Weisman, New York Times, 29 September 2006, p. C1.

We get away with this for one huge reason: Asia's export-led growth strategies, plus the Asian flu scare of the late 1990s, pushes them all, but especially China, South Korea and Japan, to put a lot of their trade surplus earnings back into U.S. currency holdings and financial markets, basically making our floating of debt (both public and private) very cheap.

For Asia, it's the best bet out there, financially, and China even uses this great recycling as a way of having our financial markets direct investments more wisely in their own economy, as a good chunk of that flow finds its way back into China as foreign direct investment.

But all that recycling will eventually come to an end. The ASEAN-plus process will eventually result in some embryonic EU-like Asian Union, and as that union grows in confidence, it will increasingly turn to itself (one another) for more financing. I mean, they don't need to send all that profit back here just to keep us buying. As their own domestic markets grows (especially China's), the key consumers will become their own.

That means the clock is ticking on this global transaction by which Asia outsources security to America and America outsources Asia's cheap labor. As this situation normalizes, so too will military ambitions in Asia (and not just in Japan either).

Yet another reason why we need to lock in China at today's prices, making sure we're not locked out of an Asian Union and are suitably advantaged--ally-wise--by an Asian NATO.

So be careful what you wish for on China's rising currency...