if you owe the bank $10,000 then you have a problem. if you owe the bank $2,000,000,000,000, then the bank has the problem.
Drew Carey used to joke that he would run stop signs in the rain just to watch the police officer get rained on while writing a ticket. Sometimes it’s not all about keeping the money. If a big, hostile player decided to wage economic warfare on the US, they would do so knowing the financial costs would be high.
I don’t think Kuwait wants to actively harm the US. However, the US has already said that Citigroup was systemically important. Too Big To Fail means that Kuwait can ask for all of its money and be assured that Citigroup will stay standing, though not without some pain for the US. Maybe something else is going on. Consider the fact that the Dubai World default announcement caught many institutions by surprise. Perhaps everything isn’t great in Kuwait, and they want some help from the US. I don’t think it could be as simple as Kuwait needing their money out of Citigroup. This line of reasoning doesn’t get very far with me. I don’t see how Kuwait would need to withdraw their funds from Citigroup if it were simply an issue of cash problems (here, let me sign you up for a new account at Citigroup. I’ll transfer the funds I owe you and get a free toaster!).
Whatever the cause of this potential transfer, it’s possible that Kuwait, Citigroup, and the US all have problems.
