Buy bye America?

Who finances the U.S.’s debt and deficits? Largely, it is the world; namely China and Japan. I wrote about this "Just Who “Owns” the USA anyways?" http://saveriomanzo.blogspot.com/2009/07/just-who-owns-usa-anyways.html

What if the “world” chose to stop buying American government debt? Well, that would be a scary thought for the U.S. dollar, and eventually to America, their economy and standard of living.

More and more we read of reports of countries that are big buyers and holders of the U.S. “paper” are becoming concerned, buying less, and looking for ways to diversify away from their large dollar holdings. (A good argument for gold?)

Discussion of this is difficult to find in “local” news papers and is more prevalent when looking at foreign business papers. However, just recently I found this in the WSJ:

Bond Worry: Will China Keep Buying?

“Shaky auctions of Treasury notes this week reignited concerns about whether the government can attract buyers from China and elsewhere to soak up trillions in new debt.

A fuse was lit this week when traders noted China's apparent absence from direct participation in two Treasury bond auctions. While China may have bought Treasurys just before the auctions, market participants read the country's actions as a worrying sign that China and other foreign investors may be ratcheting back purchases at a time when the U.S. is seeking to fund a $1.8 trillion budget deficit.”

Source: WSJ, July 31, 2009
http://online.wsj.com/article/SB124896282178793797.html



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