A little while ago, our esteemed KukriKhan raised his serious concern that China might withdraw its investments from the US debt mountain. I rather pooh-poohed his anxiety, arguing that they had a great deal to lose if they did, given the inter-relationship of the two economies.

Time moves on, and as ever, Kukri's wisdom looks like prevailing. Singapore harbour (as many others) is chock full of empty and idle container ships and tankers, marooned by the precipitous decline in world trade. China is indeed getting seriously nervous, and when those fears are enough to speak out loud (which risks spooking the entire global financial system) we might rightly consider Kukri's intial hypothesis.

What is the likelihood then, of US default or Chinese withdrawal? What would be the result? As global trade implodes, are we going to see rampant protectionism? Is anything to be done now that the course of massive stimulus is set - is there time to rein it back in?

If one looks at the graphic below, one may notice that a huge investor in US bonds is Russia. That country is facing its own meltdown - if she defaults, will that kick over the dominoes?