World War III?

With U.S and Europe deeply in debt crisis and helpful China coming along to save them, more and more assets that once belonged to the mighty West will be used as collateral to China as a promise to repay the borrowed relief funds.

A sensible 5 year old kid will understand that if you spend more than you what you earn, you will never have anything to save, in fact, you will need to borrow more to cover your future spending.

When the root cause of debt is not resolved, no matter how much money U.S and Europe borrow, they will never solve the problem. The promise to repay is as good as void.

So when the Western powers fails to repay the money, the collateral that was used to secure the loan will rightfully belongs to China.

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Imagine this:

Because you are such a big spender, you have to borrow money from your wealthy neighbour to satisfy your spending spree. At first, your neighbour accepted your IOUs and loaned you money at minimal interest. But as you need to constantly borrow to get ahead, your promise to repay the loan becomes less and less reliable.

Sensing the problem, your neighbour became reluctant to loan you money. Desperate to obtain the cash needed for your spending, you increased your interest rate and decided to use the sofa in your living room as collateral. Your neighbour reluctantly accepted and loaned you more money.

But the money you borrowed never seemed to be enough, so you decided to use your televsion, fridge, chairs, table and anything valuable you can use as collateral to obtain a loan.

Though your neighbour is generous, he is not a philanthropist. Soon, he became impatient and started to ask you for his money.

To pacify him, you decided to write more IOUs that promises a higher interest for the entire loan balance. Your neighbour rejected your offer and asked that you put your house, which is the only thing that is not used as collateral yet to extend the repayment period by a year. You heaved a sigh of relief and accepted the terms.

Finally realizing that your spending habits will not enable you to repay your loans, you decided to cut back on your spending. However, your income could not be increased significantly to allow you to cover the entire loan amount plus interest.

Time slipped by and 1 year has passed, you do not even have enough cash to cover the interest. Your neighbour has come to claim what is rightfully his: Your entire house.

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Now, imagine that you are actually U.S and Europe and your neighbour is China, when it comes to a point when China has literally owned everything that belonged to U.S and Europe, do you think the Western powers and their ego will bow down and hand everything over quietly?

Then, if the western powers refuses to surrendering whatever that was used as collateral to China and instead disowns the promise and retract all foreign ownership of their property, do you think China will just sit back and cry?

When diplomacy and trust failed, conflicts of interest will usually escalate to the use of force. That is what could potentially spark the next World War.

The war between the Debtor and Creditor is more likely than a war caused by religious differences.

China, with its vast resources in terms of raw material and manpower could easily flex their muscles and cause the world to shiver. The Western powers on the other hand, have difficulty feeding themselves without borrowing, let alone sustain a war.

If a war really breaks out because the debtor denied its creditor of what is rightfully his, the moral weight will lean towards the creditors which would amplify their already obvious advantage by many fold. Bear in mind that China is not the only country that the West owes money to. An enemy of an enemy is a friend. Alliances could be easily forged to reclaim what was denied.

Ultimately, countries would be forced to choose sides, and it is not hard to see which side would stand to gain more if they win the war. A debt ridden super power or an opportunity to reclaim what is owed.

Despite warning by so many gurus on the need to change their spending habits and living within their means, the people of the west continues to be ignorant and nonchalant. Why should they care? Nobody would willingly give up a life of luxury for a life of toil and labour.

For the rest of us who is wiser, let's grab a coupon to redeem the pie when its ready to be transferred from its original owner.