In fact, in an obtuse way desperate "war" has already been the answer.
Recall that Treasury Secretary O'Neil was fired after letting it slip that the current value of future U.S. obligations totals $44 trillion. That's 4.4 times one year's GDP (it would be like owing $440,000 in credit card debit and mortgages on an income of $100,000 -- definately a high risk of default).
At no other time on earth has a nation met an obligation of this size. In all other instances of ballooning debt-to-income ratios (never before near our current ratio) the debt was either repudiated outright (resulting in wheelbarrow inflation), destroyed by wars, or resulted in such economic hardship that the hegemon collapsed into inconsequentiality (actually all three unfold in progression). Expect the worst.
The only thing that has kept the dollar afloat is the fact that most of the world's oil is traded in dollars. Demand for oil is relatively inelastic and rising, meaning the rest of the world has to buy dollars before they can buy oil, buoying our currency against deflationary forces. However, things have been growing dicey: The dollar sank to the tune of 30% during Bush's first four years.
Note these words from George Kennan, the father of our post-WWII foriegn policy (this from PPS 23, 1948), which is still very much in effect:
The US has about 50% of the world’s wealth but only 6.3% of its population. In this situation we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming, and our attention will have to be concentrated everywhere on our immediate national objectives.
We need not deceive ourselves that we can afford the luxury of altruism and world benefaction. We should cease talks about such vague and unreal objectives as human rights and raising of living standards and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.
If other nations were to call in our debt (or cease to support the dollar either directly or indirectly), then just observe our history these last fifty years. We have not amassed the most deadly force the world has ever seen for nothing.
USG foriegn policy is in major part about punishing those that show signs of opting out of neo-liberal arrangements that benefit the owning class (this the legacy of Nitze, Kennan, et alia). We don't invade Panama, escort a leader out of Haiti at gunpoint, or mine the harbors of Nicaragua because anyone perceives them, in themselves, to be a geniune threat. It's all about crushing the example of alternate models. The capitalist says Greed is Good in one breath and whispers apathy is better in the next -- all the more easy to exploit those who have no hope for a better future!
(One shivers at the symbolism of re-appointing Elliot Abrams, Otto Reich, John Negroponte, and John Poindextor to positions of power, these shatterers of dreams. Recall the sight of storm-troopers at the FTAA meetings in Miami last year. Jack London's The Iron Heel made real. "Alternate" will be brutally repressed wherever it is seen, including here at home.)
I say "War" above, in answer to "what happens if this debt is rapidly called in?". I add that war has already been the answer. Observe Iraq. In November 2000 Saddam decided to switch selling oil for USD and instead priced oil in Euros. In 2001 we had (perhaps LIHOPed) 9-11. In 2002 we had the Orwellian march to war. In 2003 we invaded another country on the pretext "everyone could agree on" (Wolfowitz) that Iraqi possessed some of the most lethal weapons known to mankind. This was a desperate act by the oligarchs that rule us to squash the alternate example that could have led to a rapid unravelling of U.S. dominance if it was left unpunished.
Now the guantlet is down, the line has been drawn. Trust me, the rest of the world wonders in fear what their next steps should be. But it is unlikely that the whole world will roll over with just a wimper.
Given 12 December 2000; Carnahan; the "carpets of gold or carpet bombing" threat to Afghanistan; 9-11; the Patriot Act; Georgia in 2002; Wellstone; Iraq in 2003; Florida and Ohio in 2004 -- it will only get more interesting from here on out. Unfortunately!
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