The dollar has fallen, and may fall some more. That's what should happen given a trade imbalance. The trick is getting it to fall vs the controlled Yuan.
However, it's a helluva big jump from there to losing control of our economy or our country. Buffett's metaphor of islands falls apart very quickly right about the time that the people are forced to work to pay down the debt. I think that the past few years have shown (for better or worse in the particular case) that Americans are actually pretty comfortable with extreme measures for difficult times. I think that the scope of what we're willing to do to protect our interests has not been adequately factored-in by the doomsayers.
As a short term example, let's say the gov't said we are doubling taxes to balance the budget and start to pay down the debt. We'd have another gov't rather quickly, don't you think?
