It was supposed to be a win/win. In some respects the US got a benefit from cheap labor that came across the border to do work Americans themselves would not touch. So maybe NAFTA was better for the US than the relationship with China, which was strictly mercantile in nature.

Americans "would not touch" work because of the mismatch between the jobs and the compensation. Cheap labor coming across the border meant that employers didn't have to make the jobs attractive and put downward pressure on most wages. Getting tomatoes picked cheaper is hardly a good trade-off for wages that don't keep pace with the cost of living.

His conclusion is that the US economic collapse will come when China no longer needs the US and can sell its products to Chinese. Hence his argument that in about 10 years the real collapse will come.

I think the collapse is underway already, because limits on borrowing have been reached by the American consumer. The consumer must begin retrenching now, which is a long, slow process to lower living standards. All that is propping up the system now is the federal government, so if you wanted to suggest a breaking point, it comes when the world no longer accepts US Treasuries. Perhaps that coincides with China's conversion to a mature, consumer economy, but putting a date on this is very difficult.

The US also holds a trump card: it can withdraw from its role as policeman to the world. Dismantling the empire gives the US considerable breathing room in dealing with other long term problems like Social Security. It also makes it harder for the Chinese who will have to step up their military activities and begin defending Asian shipping lanes, worrying about the Taliban and al Qaeda, etc.

The Military's purpose is to guarantee US dollar hegemony and consistent and reliable Petroleum supplies ( oh yeah, and fight terrorism ;-) ). Therefore, without the military, oil exporting nations would be free to go their own way accepting dollars or whatever as payment (terrorists!), putting oil fields into more sustainable production models etc along with all the downstream ramifications of that.

There would also be a huge vacuum into which who knows what will pour. Japan and Korea would go their own way, Russia would come to own a disproportionate number of energy spigots which, IMHO, is why Europe is supporting the US in Afghanistan (Oh, and to fight terrorists RIGHT!)

I don't think calling back the legions buys time for the empire.

We need a NATION WIDE STRIKE for Real healthcare reform

that we sell them.

This is quite a remarkable piece, painfully precise. Optimist that I am, I don't want to believe it but there's a symmetrical inevitability that makes sense.

This line is intriguing: "It also makes it harder for the Chinese who will have to step up their military activities and begin defending Asian shipping lanes, worrying about the Taliban and al Qaeda, etc." Welcome to the real world of paranoia, China. What will they be defending against. Their fear of lost profits? And so begins their decline with a moribund military and static population growth for the next 40 years.

The richest irony is that the first world ascent into consumerism in China will assure us the increasingly rapid outcomes of climate change in the form of sea level changes. Our huge contributions to global eco collapse, plus those of China and India - the ones who bought the rope - will hasten everyone's doom.

Or not. Who knows but your projection is quite chilling.

A great nation reaches global economic dominance, and is forced to invest in military hardware and personnel to maintain its dominance and/or extend it. Eventually the military takes on a life of its own, demanding more and more internal resources, becoming a bigger part of the domestic economy, contributing to exports through arms sales, and dragging the country into perpetual conflicts to maintain its own dominance and/or extend it. Quite a vicious circle.

We are seeing an almost hour-to-hour reaction to the dollar's decline and stock market rallies. New lows for the dollar this year match up with new highs for the stock market this year.

One of the reasons is obvious, seen yesterday with Intel's earnings. If you measure their earnings without the benefit of foreign exchange gains achieved on their overseas sales, you don't get anywhere near as attractive a picture of growth. Most large US companies are going to show FX translation gains this year, just as they showed substantial losses when the dollar rallied last year.

Sentiment towards the dollar remains just terrible - something like 3% of investors believe it is going up, the rest think it is going down. Normally this type of extreme negativity suggests a turnaround is near, but this sentiment has lasted for over a month and still the dollar sinks.

Will it have a collapse? Possibly, since currencies tend to end their moves in blowouts. But the rate of decline so far has been slow and steady, not enough to panic the markets. Moreover, no one is putting real pressure on the US to support the dollar. The Chinese certainly won't because they have pegged the yuan to the dollar, and every day of dollar decline is yet another day of pricing advantage for the Chinese against the yen, euro, pound, etc.

Since the trade balance is falling, there is no evident inflation effect from a falling dollar. That takes this secondary element of pressure off the administration, because economists usually associate a weak currency with inflation risk as imports become pricier.

Despite all this, it does feel that matters are coming to a head in the coming weeks. Some event may occur which leads to a mad scramble for dollars. If so, the stock market will be vulnerable.

what is currently happening?

Yes, crises in the past have been dollar positive, but if the sinkhole is under the dollar, isn't that going to drive up anything and everything else that looks to retain value?