Capital has hit a block. America can't spend anymore. How is capital going to get around this massive block? The answer to that question is shifting some of the burden of consumption/spending to China. That is the big picture of our tomorrow.

The issue of imbalances is not expected to play a big role in the coming G-20 communiqué, which focuses on regulation, aid to developing countries, protectionism and stimulus. But Obama clearly signaled that the issue is on his radar, and that policy shifts may be coming. In practice, this means measures in the medium term that will encourage greater consumption and spending in developing nations like China, and more saving and less debt in the U.S. Although he was vague, Obama discussed what would amount to a reworking of the basic economic physics that governs our world. It's a delicate balance, however, because too much savings in the short term could delay an economic recovery.

This issue popped up again, in the most oblique way, later on Wednesday, when Obama met with Chinese President Hu Jintao. Although the issue of imbalances was not raised directly by either man, according to a senior U.S. Administration official, the joint statement released by the two nations said both countries want to deal with the underlying causes. "[Obama] underscored that once recovery is firmly established, the United States will act to cut the U.S. fiscal deficit in half and bring the deficit down to a level that is sustainable," the statement reads. "President Hu emphasized China's commitment to strengthen and improve macroeconomic control and expand domestic demand, particularly consumer demand, to ensure sustainable growth and ensure steady and relatively fast economic development." In other words, China will seek to spend more, and the U.S. will seek to spend less.

First, America exported its factories to China; second, it will export a chunk of its consumption to the land of the dragons.

Let's conclude with a famous poem by my favorite Tang Dynasty poet, Li Bai (the translation is Witter Bynner—his collection The Jade Mountain deserves a place in any home that images itself to be cultivated)

Drinking Alone with the Moon

From a pot of wine among the flowers
I drank alone. There was no one with me—
Till, raising my cup, I asked the bright moon
To bring me my shadow and make us three.
Alas, the moon was unable to drink
And my shadow tagged me vacantly;
But still for a while I had these friends.
To cheer me through the end of spring . . .
I sang. The moon encouraged me.
I danced. My shadow tumbled after.
As long as I knew, we were boon companions.
And then I was drunk, and we lost one another.
. . . Shall goodwill ever be secure?
I watch the long road of the River of Stars.