Wire services, reporting on the Chinese decision Thursday to stop linking the value of the yuan to the dollar, that U.S. consumers could begin seeing rising prices on Chinese made goods like sneakers, clothing and electronics n basically everything we buy that we don't eat.

While that's a short term concern, the real concern is in the long term n that if the move yesterday was the beginning a major overhaul in Chinese fiscal policy. If so, the results could be much more serious than higher-priced Nikes.

Many pessimistic pundits for several years now have been lamenting the fact that China, buy investing in dollars and in turn buying up U.S. bonds with them, has been basically funding this nation's massive spending spree of the past four years.

The huge federal deficits, along with individual debt load which is the highest it's every been, has basically been a gift from the Chinese. The bill for our excess could be coming due.

Paul Krugman points out in today's New York Times that throughout history, capital has flowed from developed nations to the emerging nations.

This was the true in the 19th century when developed Britain basically funding U.S. industrialization and has continued through the 1990s when capital from the U.S. and Japan flowed to emerging Asian nations.

Krugman writes: "And what about the strategic effects? Right now America is a superpower living on credit – something I don’t think has happened since Philip II ruled Spain. What will happen to our stature if and when China takes away our credit card?"

Since 2001, capital has flowed the other way.

What could happen, economists say, is that when the Chinese pull out of the bond market, U.S. interest rates will skyrocket, driving many holding adjustable rate mortgages to bankruptcy (Oh yeah, we don't have that anymore, so they will probably be driven to indentured servitude). Many jobs in the real estate and building industries will go the way of steel industry jobs. It might not be pretty.

Please don't forget this evening to come to Constant's Wharf for the TGIF concert series. This week's featured performer is Cooter's Garage Band. It should be a lot of fun. The park is open from 5:30 until 10 p.m., but I highly recommend staying inside in the air conditioning until about .

Don't forget to stop by the News-Herald's tent and register to win a DVD player.