Look out! Nothing leads to rash actions faster than a politician who sees his support slipping away.

From the NYT:

President Obama increased pressure on China to immediately revalue its currency on Thursday, devoting most of a two-hour meeting with China’s prime minister to the issue and sending the message, according to one of his top aides, that if “the Chinese don’t take actions, we have other means of protecting U.S. interests.”

But Prime Minister Wen Jiabao barely budged beyond his familiar talking points about gradual “reform” of China’s currency policy, leaving it unclear whether Mr. Obama’s message would change Beijing’s economic or political calculus.

Let me amend that opening second sentence to read that nothing leads to rash actions faster than politicians faced with intractable problems.

Having tried to lay blame for America’s malaise far and wide, the Washington political establishment is doing what they do best, finding a villain the public will buy into and painting him as the source of all problems. China, give Jamie Dimon a call on how to handle what’s coming.

While all of this is predictable, taking this game international has lots of risks. China, in my opinion, has an inflated opinion of itself and might not act predictably. At the very least, I don’t see them backing down readily and they might well throw a spanner from left field into the gears. It’s the sort of thing that could spin out of control faster than anyone might imagine and given the fragile state of the world’s economy potentially devastating.

It’s always the little, most innocuous things that tend to cause life to spin out of control. Caution should be the watchword here.