There's an old saying that a person can be in trouble when he owes a bank a hundred bucks. But if he owes $100 million, the bank could be in trouble. We owe China billions, but they realize that collapse of American capitalism-once a goal-could also trigger a collapse of Chinese "communism." That's how mutually intertwined we have become, and how complicit we are with a government which the Committee to Protect Journalists says now jails more journalists than any other.

The New York Times reports on the big trip that will bring Treasury Secretary Henry Paulson and company on their ballyhooed "excellent adventure" to Beijing. Yet it doesn't look like much will happen:

"...Pressure is mounting on [Paulson] to produce results or face a wave of protectionist measures in the new Congress next year.

Mr. Paulson conferred this week with business leaders urging him to bring about changes in China's economic practices, particularly its regulated economy, manipulation of currency levels to spur exports and its failure to crack down on piracy of software, pharmaceuticals and other items.

At the same time, Mr. Paulson's aides were also conferring with Chinese representatives preparing for his Dec. 13-15 trip. Both sides cautioned not to expect breakthroughs on the big issues, in part because the Chinese cannot be seen as kowtowing to American pressure."

So we will hear a lot of rhetoric in the days to come about China's failures to honor agreements and violations of trade regimes. They will all be true-but besides the point. Who has the power to bring China into line? We don't. We are as dependent in Beijing as we are in Baghdad.

The Times reports that "Pascal Lamy, director general of the World Trade Organization, said in a recent interview. 'There are constituencies and vested interests. You can't deal with the Chinese by banging on the table, going to the balcony and saying, 'This is what I want.' "

What's really going on? It looks like this could be the opening stages of a trade war, revolving in part around the shrinking power of the dollar.

And that war could do more damage to the U.S. than the defeat in Iraq.

Already, as I have reported , the Treasury Department has opened a global crisis management center that sounds very much like an economic war room. It is headed by none other than Jim Wilkinson, the GOP info warrior who ran the Coalition Media Center during the opening days of the Iraq War, when great victories were all we read about in the news.

What we are not reading today is how serious this is. And how our national and consumer debt is at the center of it. Reports The Economist:

America's growth has been driven by consumer spending. That spending, supported by increased borrowing, is clearly unsustainable; and the consequent economic and financial imbalances must invariably unwind. As that happens, the country could face a prolonged period of slower growth.

The bill is coming due. The piper must be paid. And all the financial wonks and gnomes and commissars worldwide know it. In many quarters, the euro looks like a better bet than the dollar. Why? The Economist says productivity growth is going down in the U.S. and up in Europe. The U.S. structural budget deficit has widened and American savings has gone down. Their cover story speaks of illusions in Washington. Sound familiar?

A slump in the American economy is likely to be cushioned by banks and investors overseas because it could bring them down, too. What this means is that we are dependent on what others do or fail to do. Washington is actually undermining the dollar in hopes it will make our exports cheaper and thus ease the deficit. It's our way of pressuring the Chinese and try to get them lower the value of their currency.

Clever? Don't be so sure. They are not fools.

If China's wise men decide that propping up the dollar is not in their interest, they can move more money in euros. And then the real battle begins. Already their finance minister said they are "diversifying" their currencies. That's not in "our interest" and yet our monetary manipulations could backfire, as Robert Sinche of the Bank of America suggests. Listen to this:

Let's say China revalues by 10 percent overnight. The prices at Wal-Mart go up 10 percent. So we then see worse inflation, the Fed tightens monetary policies and we end up with higher inflation, higher prices and higher interest rates. Remind me again why that's what we want.

Forget the Beijing Olympics. This is the real game in town.

So if you didn't trust this administration on the war, why should you trust them on economics? When you know the war casualty figures have been downplayed, why do you think the jobless figures and "misery index" are not? Would you give your money and your destiny over to con men? Of course not, if you knew what the con is.

Unfortunately, the real news about these manipulations is buried in the labyrinth of the business pages, where many claim of having the "MEGO" (My Eyes Glaze Over) effect.

So that's why it's time to pay attention to the dropping dollar, the China game and the housing "train wreck," as experts call it. It feeds into the global credit crunch and affects all of us, and we need our media to explain it all more clearly-with less of a big business bias and more of a "who wins and who loses" framework.

While we watch one war go up in flames, the matches are being lit for another one.

Danny Schechter edits MediaChannel.org. He is the director of "In Debt We Trust," a new film on the credit crunch, and author of Falun Gong's Challenge to China. Comments can be sent to dissector@mediachannel.org.

Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.

Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.

Meanwhile, they increased their holdings of euros from 20 to 22 per cent, the BIS said. The speed of the shift may help to explain the weakness of the dollar, which recently fell to a 20-month low against the euro and a 14-year low against sterling.

The BIS, the central bank for the developed world's central banks, is customarily cautious in its language. However, it noted: "While the data are not comprehensive, they do appear to indicate a modest shift over the quarter in the US dollar share of reporting banks' liabilities to oil exporting countries."

The review shows that Qatar and Iran, whose foreign exchange policy has sparked widespread market speculation, cut their dollar holdings by $2.4bn and $4bn respectively.

Such shifts may be modest compared with the total assets held, but they provide a crucial indication on future thinking.

Currency switches are likely to be progressive, subtle and discreet, as untoward attention could hit the dollar, lowering the value of depositors' remaining dollar-denominated assets.

The last time oil-exporting countries cut their exposure to the dollar - in late 2003 - it pushed the euro to an all-time high against the dollar. Eighteen months ago, the exposure to the dollar of oil producing countries was above 70 per cent.

BIS data is the best guide financial markets have to the currency investment trends of oil producers, which otherwise do not provide figures. The rise in oil prices since 2002 means oil producing countries have amassed a current account surplus of about $500bn, according to the IMF. This is 2½ times the current account surplus of China.

Overall, Opec's dollar deposits fell by $5.3bn, while euro and yen-denominated deposits rose $2.8bn and $3.8bn, respectively. Placements of dollars by Russians rose by $5bn, but most of their $16bn additional deposits were denominated in euros.

The dollar has suffered weakness because of concerns about global imbalances and the future course of the Federal Reserve's interest rate policy.

His remarks came as the six-party talks on Pyongyang's nuclear programs set to resume in Beijing next week. During the talks, the North hopes to find a negotiated way out of financial restrictions imposed by the United States for its alleged illegal activities, such as counterfeiting and money laundering.

Washington promised to set up a working group within the six-party framework to discuss sanctions. The North's accounts in Banco Delta Asia in Macau were frozen in September 2006, and sanctions have now almost severed Pyongyang's access to the global financial network.

"We must also go beyond simply designating individuals and entities that have been named by the United Nations and proactively identify terrorist supporters that threaten our societies, hold them publicly accountable, isolate them financially and commercially, and ensure that all of their activities, whether seemingly legitimate or illicit, are shut down," he said.

In a related development, the Macau bank recently said in a filing to the U.S. Treasury Department that it bought gold from the North, Bloomberg reported on Monday.

The bank said in a letter dated Oct. 18 that it "purchased a large share of the gold bullion produced by North Korea" before being listed by the United States as a "primary money-laundering concern."

"Money could have been laundered, but there is no specific evidence that the bank was aware that it was being used for this purpose, nor that it facilitated any criminal activities,'' the letter said.

The bank said it revamped its management system after the U.S. action, froze North Korea-related accounts, hired an outside firm to establish procedures against money laundering and asked the Treasury Department to reconsider its ruling.

North Korean assets worth about $24 million are held at the bank.

A North Korean official in New York confirmed Pyongyang's participation in the six-party talks on Tuesday.

"The talks will be held next week, but it is the moment to watch how talks develop," Yonhap News Agency quoted Kim Myong-gil, a minister for North Korea's mission to the United Nations in New York, as saying.

He declined to elaborate, the wire service said.

North Korea agreed in September 2005 to dismantle its nuclear programs in return for security guarantees and economic aid, but follow-up negotiations have not made any progress.

Pyongyang: Japan's reactionaries are kowtowing to the U.S., muttering that Japan must intercept missiles flying toward the United States, and that it has no choice but to allow U.S. warships carrying nuclear weapons to pass through Japan's territorial waters. Commenting on this, the Minju Joson [the government newspaper thought to be an organ of Kim Jong-il's cabinet] said on Tuesday:

Japan has the inveterate bad habit of fishing in troubled waters by clinging to the coattails of its master.

Tokyo is now struggling hard to free itself of the binding force of Article 9 of Japan's Constitution. The Japanese chief executive is attempting to revise the constitution, but due to strong opposition from the public and from abroad, no progress has yet been made on the initiative. But the Japanese reactionaries continue to try to reinterpret and modify key elements of the article.

[Editor's Note: Article 9 of Japan's Constitution, which was imposed on it by the U.S. after World War II, says: Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized].

The Japanese reactionaries conceived of the idea of active security cooperation with the U.S. as a way to attain their sinister purpose. In return for helping the U.S. address its security concerns, the Japanese reactionaries obtain justification for exercising the right to "collective self-defense" outlined on Article 9.

The Japanese reactionaries will leave no method untried to realize their cherished desire to become the "Rulers of Asia" be militarizing Japan. There are no boots that they wouldn't lick to achieve this purpose. Japan is the only country in the world that would struggle so hard to attain so sinister a purpose.

The Japanese reactionaries are naïve enough to think that their troubles will be over once the path to militarist expansion is paved.

The exercise of the "right to collective self-defense" is as foolish an act as jumping into fire with a faggot on one's back. These reactionaries would be well advised to ponder the consequences of their reckless acts and behave themselves.

Pyongyang: General Secretary Kim Jong-il inspected a sub-unit of Korean People's Army Unit 109, which has the honored title of the "O Jung-hup 7th Brigade ." He learned of the sub-unit's performance before inspecting its technical and combat equipment.

[Editor's Note: The 'O Jung-hup 7th Brigade,' was formed to safeguard the life of Kim Jong-il, and is a specially trained unit made up of outstanding officers and enlisted men from the Army, Navy and Air Force. The members of the unit undergo a year of harsh training in rugged mountain terrain. The O Jung-hup 7th Brigade not only guards Kim Jong-il, but it conducts special operations that he orders. Another perk enjoyed by the brigade is the use of live ammunition for training purposes, as much as ten times more than ordinary units.

The Dear Leader set forth the tasks to be undertaken to boost the unit's combat capabilities. He also praised the service men and women of the Brigade for prizing their weapons like apples of their eyes, in the same spirit which was displayed in the way the anti-Japanese revolutionary fighters prized their weapons. Its commander is said to enjoy the use four motor vehicles, twice the number allotted to ordinary division commanders, including a Mercedes limousine, a Mercedes jeep, a Russian-made military Uarz jeep and a commander's armored car].

The General Secretary than took great care checking the services and living quarters of the Brigades service people, visiting an education room, a bedroom, a mess hall, a washing and bath house, a non-staple food store, a barn and some other facilities.

Noting that increasing combat capabilities and providing servicepersons with good living conditions is vitally important, he stressed the need for commanding officers to pay close attention to the maintenance of services at all times.

It's only after service people read many books that they truly grasp the policies and line of the Workers' Party of Korea. In this way, he said, they can acquire broad and profound knowledge about politics, economics and culture. He also underscored the need to publish and distribute more books of a wide variety.

As long as the army and people work together, our society will remain invincible and we will be assured one victory after another in out battles with the enemy, the Leader noted. He gave each service person in the Brigade gifts of a pair of binoculars, a machine gun and an automatic rifle, and he then held a photo session with them.

He was accompanied by Korean People s Army Generals Ri Myong-su, Hyon Chol-hae and Pak Jae-gyong, and Hwang Pyong-so, Vice Department Director of the Workers' Party of Korea.