China owns us.

Okay, that's a SLIGHT exagerration; but it contains an important truth: They ARE financing our deficit and we are in a world of shit if they stop.

Here's Krugman:

There's no sign that anyone in the administration has faced up to an unpleasant reality: the U.S. economy has become dependent on low-interest loans from China and other foreign governments, and it's likely to have major problems when those loans are no longer forthcoming.