China Now Number One Holder of U.S. Debt
The economic hits just keep on coming, don’t they? As if we didn’t have enough going on with this credit crisis and and the increasingly broad socialist bailout, we now read that China has surpassed Japan as the largest foreign holder of Treasury debt:
China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries, as foreign investors sought the relative safety of government debt as stocks plunged 9.1 percent that month.
China led all foreign official investors in September by posting a net increase in U.S. Treasuries for the sixth month in the past seven, bringing its total ownership close to $600 billion. Japan was a net seller of Treasuries for the fourth month in the past six.
China’s ownership of U.S. government debt has doubled since July 2005, while Japan’s holdings are down from a peak of $699 billion in August 2004.
Foreign demand for Fannie Mae, Freddie Mac and other U.S. agency debt increased from a month earlier. Purchases of long- term agency debt totaled a net $6.2 billion, compared with net sales of $8.7 billion in August.
The shills on Wall Street and Washington will tell us that we ought to be thankful for China’s and other foreign government’s purchases of our debt or we the economy would be in even worse shape. That might be correct, but only short-term.
I’m not suggesting that we ban foreign government investments in Treasury securities, but perhaps they should be limited.
Is anyone going to tell me China holding so much of our debt is a good thing and not an economic risk?
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