HONG KONG -- China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers. The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time. On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits "for years to come," even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.'s. In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.But now Beijing is seeking to pay for its own $600 billion stimulus -- just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.
HONG KONG -- China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.
The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.
On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits "for years to come," even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.'s.
In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.
But now Beijing is seeking to pay for its own $600 billion stimulus -- just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.
"...largest overseas holder of Treasuries."
Indeed, that is true according to this chart: http://www.treas.gov/tic/mfh.txt
But to be clear, so that we can address all the boogie-men (and women, and others) at one time, we should be clear...According to the chart on page 48 at: http://www.fms.treas.gov/bulletin/b2008-4.pdf
Total Public Debt - 10,025 Billion Foriegn and International - 2,862 Billion
What is the rest, pray tell? A lot of it is the government loaning money that it has borrowed from its future self, or something like that. For example, the Social Security money is there...kind of...it has actually been spent in the napalm-soaked forests of Viet Nam and the Depleted Uranium saturated sands of West Asia...but since it loaned that money to the Feds, it is actually borrowing that somehow as well.
I'm still too shook up - having just learned that I pay taxes to the two largest suppliers of the weapons 'sold' to Israel, France and the US - I can't be expected to figure this out.
Googling "House of Freaking Card with No Chance of Holding Up or Getting Rebuilt" gave me "See Roman and English Empires" Never underestimate their intelligence, always underestimate their knowledge.
Frank Delaney ~ Ireland
