Politically, however, the United States will unquestionably come out as a loser. It would be interpreted as a loss of face at home, in China and all over the world: the world’s former economic superpower has to ask for help to service its debt so unwisely run up over several decades.
The question will be asked whether China will put a price on its help. It may not need to do so because the mere signal of American economic impotence is sufficient to tip the scales where both the United States and China have conflicting interests. According to Wikileaks, then Secretary of State Hillary Clinton remarked to Australia’s Prime Minister Kevin Rudd during a conversation in March 2009, "How do you deal toughly with your banker?" In an interview in May 2012, after his retirement as chairman of the joint chiefs, Admiral Mike Mullen fleshed it out saying “Actually the way I said it was—and I still believe this—that it’s the single biggest threat to our national security. Obviously it’s complex, but the way I looked at it, if we didn’t get control of our debt, there would be continued loss of confidence in America.”
These astute and blunt revelations of the nexus between debt, power and confidence have largely been forgotten as the federal deficit over recent years fell to around 3 percent. The figures outlined above disclose that the birds let loose are now coming home to roost engineering a gradual power shift from one big power to another through the intricate ways such power shifts take place.
Joergen Oerstroem Moeller is a former state secretary in the Royal Danish Foreign Ministry. He is a visiting senior fellow at the ISEAS Yusof Ishak Institute, Singapore.