Beholden to Beijing.(Insider Report)

"As the U.S. has grown ever reliant on foreign central banks to finance its trade and budget deficits, the question arises: Could foreign governments, like China's, one day use this clout to influence U.S. foreign policy?" Greg Ip of the Wall Street Journal posed that question in the paper's April 26 issue, and elaborated on it by offering a disturbing--and plausible--scenario.

"Imagine a standoff between the U.S. and China over Taiwanese independence," posits Ip. "What would happen if China stopped buying U.S. bonds, or sold them outright? As bond prices fell, their yields, which move in the opposite direction, would rise. Mortgage rates would rise, depressing home sales and weakening the economy."

New York Times columnist Thomas Friedman, not one usually given to public expressions of piety, underscored our government's growing dependence on Beijing by suggesting that our leaders--along with those ...