@EmperorNero,
I'm sure the Chinese and the Arabs are debating that question right now, but it's not that simple of a choice. Yes, if those nations stopped buying our debt, government and private, the current world economic system (and balance of power) would crumble. However, that does not mean that the world itself will collapse; i.e. after the initial shock, the productive parts of the world will probably recover fairly rapidly, while America is torn apart by any one or a combination of the disasters of hyperinflation, mass unemployment, rioting, perhaps even civil war. There's a great metaphor from Peter Schiff on exactlt this 'decoupling.' There are these nine guys stranded on an island; eight of them are asian, one is an american. They decide the divy up the work. One of the asian guys gets the job of cutting firewood, another fishes, another hunts, and so on. The American gets the job of eating the feast that the asians prepare for him everyday, leaving just enough crumbs to keep them working. Kenysian lunatics would say that the American is the key to whole island economy, because without him there would be no demand for the feast and the asians would be out fo work. However, if the American suddenly vanished, the asians could eat the feast themselves and vastly improve their standard of living. In other words, the loss of the 'mighty american consumer' would cause a reorganization and a severe crisis in the world system, but it would only end badly for America. The rest of the world, primarily Asia, would simply start consuming domesticall what it had been producing for export. And of course that is exactly what the Chinese are trying to do now. I think they expected this to become neccessary eventually, but weren't expecting this crisis to come so soon. We consume 90% of the world's savings...that simply cannot continue, and the longer this system creaks along the worse the final collapse will be.
