THEME: FORGET PEARL HARBOR, REMEMBER PEBBLE BEACH

The media has declined to remind us that today is the 63rd anniversary of the bombing of Pearl Harbor. So, if you didn't know it was, you know it now.

In a seemingly unrelated note, here is a quote from a WSJ article today:

To suggest that the U.S. is a triple-A credit "would be to suggest that it can pay its bills over a long period of time in a stable currency," says William Gross, chief investment officer at Pacific Investment Management Co., or Pimco, which runs the nation's largest bond mutual fund. "That is no longer true."

Bill Gross has been quite negative on the US dollar and its bonds so this opinion is certainly fitting. What is interesting is this particular angle.

Of course, no self-respecting credit agency would even entertain the thought of downgrading the debt of the US government. It is the benchmark by which all credit is based off of. But what does it say about the whole credit-rating agency system when they are more than happy to slap the face of Japan even though they have consistently run trade surpluses against the US for decades now?

In a sense, the credit-rating agency system is just another arm of the American Empire. Americans like to believe they are fair, but they are simply unable to see the world through others' eyes.

The one intriguing idea from the same story:

Such deterioration might force foreign bondholders to demand that the U.S. issue more of its debt in foreign currency, which would be one of the longer term risks to the rating, says Moody's Mr. Hess. "The U.S. is a long way from not being triple-A," adds Lionel Price, Fitch's chief economist. "But it's not set in stone."

Today, this concept sounds like heresy. However, I remember not too long ago, when alarmists were raising the specter of the US having to issue Japanese Yen denominated debt.

Remember during those golden Reagan days when the term "Japan bashing" was invented? Japan was a threat to our national security. They were planning payback for our dropping of "Little Boy" on Hiroshima. We clever Americans took action and promptly sold off bits and pieces of our famous assets to the Japanese at ridiculous prices, only to buy them back later cheaper. Forget Pearl Harbor, remember Pebble Beach!

What is different this time is that we no longer perceive any country as a threat (Al Qaeda is still country-less). Where are the xenophobes when you need them? Where are the Congressmen smashing Chinese made toys on the steps of the Capitol building? No, they are too busy chasing down those suspicious looking Muslims.

The Chinese have learned from the Japanese. Keep a low profile. Smashing Chinese goods means smashing Wal-Mart. And we know from John Kerry's loss that labor would rather lynch Al Qaeda than lynch Wal-Mart executives.

This is great cover for China. When China revalues the yuan, and our inflation goes through the roof, we'll all be shaking our heads wondering why didn't we see it coming.

China will succeed where Japan failed.