For years, Americans have reveled in profligate, load-up-the-back- of-the-SUV-at-Target excess, much of it paid for by credit cards, home equity or other loans. The binge has produced some supposedly healthy economic growth and provided everyone lots of nice stuff. But now debt collectors from around the world are knocking. That's why today's turmoil in U.S. financial markets will end in a massive transfer of wealth from America to the rest of the globe.

The housing bust, the subprime catastrophe, the Bear Stearns evaporation, and the tanking markets have already dented household wealth. But this is just the beginning. These events are only the trigger to a larger problem that affects America's standing in the global economy.

That problem is America's vast, unsustainable trade deficit with the rest of the world. The deficit has created stuffed storehouses of dollars and dollar-based securities at many of America's most important trading partners. The dollar reserves are especially large in Asia, where export-oriented countries like China and Japan have run large trade surpluses with the U.S. The Bush Administration has attempted to pin the blame for the trade deficit on "unfair" practices by foreign countries. Special abuse was reserved for China. Bush has maintained that Beijing's manipulation of its currency, the yuan, made Chinese-produced goods exceptionally cheap and as a result they have flooded the U.S. market.

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