Who owns America's debt?

[malaise]

http://www.guardian.co.uk/news/datablog/2009/mar/13/useconomy-china


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The best comment:
Its these government bonds that have financed the invasions of Iraq and Afghanistan. Its estimated that a third of US federal taxes go on the military machine as well. The shocking thing is that instead of China using its export earnings to improve the lot of its own people, the money has been used to finance the military industrial complex of the USA, grown out of all proportion under Bush.

[SpiralHawk]

1. China Got a Colossal Crapload. Check this out from today's NYT

DU discussion in LBN

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3782350&mesg_id=3782350

Another toxic legacy from Commander AWOL Bush, VP Dickie 'Five Military Deferments' Cheney, and their Cabal of allegedly 'conservative' Repubublicon Cronies.

The republicons have left America so screwn.

Apparently -- and perhaps in part due to the slick skulduggery of republicon cronies and BFEE scions Marvelous Marvin Bush and Neil Silverado Bush -- China is Stupendously Screwn, too.

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China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries
Source: The New York Times

By MICHAEL WINES, KEITH BRADSHER and MARK LANDLER
Published: March 13, 2009

BEIJING — The Chinese prime minister, Wen Jiabao, spoke in unusually blunt terms on Friday about the “safety” of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to offer assurances that the securities would maintain their value.

Speaking ahead of a meeting of finance ministers and bankers this weekend near London to lay the groundwork for next month’s Group of 20 summit meeting of the nations with the 20 largest economies, Mr. Wen said that he was “worried” about China’s holdings of United States Treasury bonds and other debt, and that China was watching economic developments in the United States closely.

(snip)

QUOTATION OF THE DAY

"We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried." - PRIME MINISTER WEN JIABAO, of China.


Read more: http://www.nytimes.com/2009/03/14/world/asia/14china.ht...

[malaise]

4. I've been following this since yesterday

This will become one unbelievable mess. Mulloy says US government policies for the last 20 years created this mess.

Reagan, Clinton and Bush sure fucked up.

[Waiting For Everyman]

10. And these were "profits" from allowing them to dump goods into our economy.

Why the hell should we pay THEM for the privilege of flooding our economy? When do WE get paid for putting up with it? I'd say they got caught at the scam, and it's over. If a drug dealer gets ripped off in a deal, does he call a cop? I wonder why not. :sarcasm: Theft is theft, isn't it? A contract's a contract, and all that.

Maybe we're not quite as stupid (or complacent) as they hoped we were. Yeah, they should worry. Because maybe we're not after all. And maybe it's impossible to complete this so-called "deal", even if we wanted to. I'd say the robbers screwed up on this one. Tough.

[malaise]

2. China issues a warning!!

http://www.guardian.co.uk/world/2009/mar/14/china-us-economy
<snip>
Wen Jiabao, China's prime minister, issued a veiled warning to America yesterday to maintain control over its economy in the latest sign the global economic crisis is testing the most important bilateral relationship in the world.

In forthright remarks on the intertwined nature of US and Chinese finances, Wen told a news conference he was "worried" about Beijing's holdings of American government debt. Analysts believe China has $1trn (£716bn) of US treasury bills in its coffers, implying a delicate balance between two powers whose fortunes are interlinked.

Speaking at an annual press conference at the end of China's rubber-stamp parliament, Wen said: "President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures.

"We have lent a huge amount of money to the US. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried." In rare comments on another country's financial health, he added: "I'd like to take this opportunity here to implore the United States ... to honour its words, stay a credible nation and ensure the safety of Chinese assets."
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China was burned big time with those derivatives. I'm betting the US has no intention of ever returning this money.

Patrick Mulloy is discussing this on CSpan now.

[The_Casual_Observer]

3. It's no wonder that the government from the top down is pro china.

[Greyhound]

5. Where did Saudi Arabia go?

Oh yes, it's another Murdock publication...
:eyes:

[evans5000]

11. The Guardian is NOT a Murdoch publication

Murdoch owns the Guardian? He does not; your statement is factually incorrect. It is most definitely NOT a Murdoch paper! The information displayed by the topic originator, is from the London Guardian newspaper; it is owned by the Scott Trust, a private not-for-profit organization. The general readership of the Guardian newspaper is left of center, and it is very anti-Murdoch (he owns the London Times, and a bunch of UK tabloids). It generally backs the UK Labor party and the US Democratic party. It is also highly critical of the Chinese government in relation to the lack of democracy in that country & the situation in Tibet. A cursory glance through their website www.guardian.co.uk will show you this. It is one of the world's leading English language newspaper websites.

[Greyhound]

13. You're right. I was thinking of the Independent. n/t

[Peace Patriot]

6. Hey, Malaise, thank you for this post. I am bookmarking it. Nothing like a visual

such as this to help us really grasp our situation.

I've heard people say, alternately, "China," or, "Not China, Japan," about who holds the most US debt paper. Also Saudi Arabia (not on the chart at all). So the China vs Japan thing is settled. It's both. And Saudi Arabia is not in the picture, as a major US debt holder.

The one that surprises me the most is Brazil. Its center-left president for many years, Lula da Silva, is closely allied with South America's leftist leaders (in Venezuela, Bolivia, Ecuador, Argentina, Uruguay and Paraguay), one of whose primary goals is independence from US economic domination. (Thus, for instance, Venezuela led the way on creation of the Bank of the South--regional control of development/finance, with social justice goals--and Brazil and others have led the way on creation of the new South American common market, UNASUR.) So-o-o, it surprises me to see that Brazil has bought into so much US debt, and helped finance its oil war in Iraq, which is immensely unpopular in South America.

Da Silva will be meeting with Obama quite soon--and da Silva has the specific and stated purpose of improving Obama's understanding of leftist democracies such as Venezuela and Bolivia (about which there has been such incredible disinformation from the Bushwhack State Dept. and the corpo/fascist press). The corpo/fascist press likes to paint Latin America as a beggar when it comes to Washington. Brazil's ownership of $130 billion of US debt paper says otherwise. So does Venezuela's $42 billion in international cash reserves--the result of good management by the Chavez government. Venezuela is in good shape, while the US is essentially bankrupt. The pundits are not kidding when they talk about world "realignment," but they often omit the realignment to the democratic left that has taken place in South America (--except to demonize it).

[malaise]

9. You're welcome n/t

[Tierra_y_Libertad]

7. The Chines are smart shoppers. Using the "strong" dollar to buy up assets.

Everything from mineral rights in Australia, to Oil contracts in the middle east, to both in South America and Africa. They are propping up the dollar with their continued loans which we need just to survive for good reason.

The problem(s) is that the "strong" dollar (U.S. Treasuries) that, not just China, other countries are buying is creating a massive bubble.

All it will take is China to start divesting it's Treasury holdings and a panic will set in. Dropping the value of the dollar, and America's credit, precipitously.

The U.S. has no choice but to work with China in handling the financial crises. We have much more to lose than the Chinese.

[HamdenRice]

8. Slight correction about "instead of China using ... earnings to improve the lot of its own people"

To understand this strategy, you have to understand the Chinese economic mentality. First, the typical Chinese person is incredibly frugal and a very big saver. They don't consume a lot because they don't want to consume a lot. A typical peasant wearing worn out shoes and a threadbare Mao jacket may have more money in the bank than an American living paycheck to paycheck in a MacMansion and driving a SUV.

For all its sophistication, the government of China thinks about finance a lot like a Chinese peasant or worker.

The strategy behind using the money to finance the US is that whatever they "give" the US "today" (for whatever idiotic reason the US uses it for, like the wars) grows and becomes bigger next year. Whatever consumption is postponed (any "improvement in the lot of people") causes an even bigger possible improvement, an exponential improvement, in the life of the people 5 years down the road -- because of compound interest.

That's how China went from being the place your mother scolded you about when telling you to eat your vegetables ("don't you know there are millions of people starving in China?") to the place that is the creditor of the biggest empire in history.

[Angleae]

12. They forgot the over $5 trillion held by US govt agencies.

Mainly social security/medicare.