the issue of whether china's holding us treasury notes in its foreign currency reserves is good or bad for the u.s. and the potential impact this has on u.s. foreign policy is tad bit complicated. it a nutshell, my sense is that their holding u.s. notes is helpful to the u.s. economy (i.e. they are subsiding our consumption) and has no impact on u.s. foreign policy (the chinese would probably be hurt the most from currency appreciation vs. the usd which is why the are only gradually removing the usd peg). again, i think it has absolutely no impact on u.s. foreign policy.
i don't think u.s. action in iraq has had any impact on north korean decision making. they have been on this course for 20yrs. developing delivery systems and nuclear bomb technology ever since they gained access to nuclear technology from the chinese, russians and pakistani's. one could put forward an arguement that the u.s. defeat of iraq's army scared lil kim, which is why he developed the bomb. i don't think this idea holds up to rigorous scrutiny because of the terrain of the korean pennisula, the u.s. force structure and ROK army capabilities. in a nutshell, lil kim knows we wont invade and we know he wont attack the south
so, why is lil kim developing a bomb? probably three reasons, 1/ weaken the u.s. president politically, 2/ block increase financial restrictions being placed on them, see
BBC News re: Banco Delta Asia 3/ change the "facts on the ground" so that he can reposition the negotiating position of the north (i.e. his political class).
my personal view is that against these 3 goals, he has done well this round; but the game is long
i think you are confusing two fairly different foreign policy questions. the issues driving u.s. policy in each region are - and should be - different. nuclearization of the korean pennisula is an asian problem. they need to develop the polical processes to solve it. u.s. involvement is inhibiting a clarity of thought on this.
kc, i am sure you want to paint this all with a broad anti-bush/anti-republicans/anti-whatever brush, but that is really not helpful. the problem of north korea is really a cross-party issue. it only becomes partisan in that it allows one polical group to gain leverage as being a "hawk" on a specific foriegn policy topic for domestic polical consumption. in the end, i don't think a democrat, republican, independent, green,...whatever...can solve this. only china, japan and south korea can.