Yes, China's economy is slowing down and has been for at least a year. It was built on unsustainable principles including lots of government spending. It's finally catching up to them and their bubble is bursting. The key thing to remember, however, is that they remain our largest manufacturer and largest foreign creditor. They also don't really like us. It wouldn't really be out of their game plan to induce self-inflicted recession if it damages us to at least a similar degree.

The US economy for the past several years has been far too dependent on the stock market for investing, as institutional investors are avoiding the housing sector and bond returns barely stay even with inflation. The long and the short is that the economy is muddling along, yet because there isn't an even distribution of investment alternatives, the most volatile is being forced to soak up the extra money and create a bubble few are willing to admit exists. It is a timebomb waiting to go off, with potentially disastrous results.

What is actually the worst thing that could happen? Deflation in any sizable amount would be disastrous to our debt-fueled economy, as the cost of debt would drive many out of business overnight. It would also put the Treasury in a bind as it is already madly scrambling to roll over its debt - if T-bill values suddenly plummeted, it might force a default, which would rock not only the US economy, but that of the world.

Yes, these are what-if's. But no one who actually looks at the fundamentals of our economy can claim it is healthy.