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We ALL owe China!


Photo: The Bush Whitehouse
There has been a great deal of controversy over the fact that the United States owes China $789.6 billion in Treasury Securities.
Then again, we owe Japan $757.3 billion and the United Kingdom $277.5 billion.
Technical stuff: Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes
reported under the Treasury International Capital (TIC) reporting 
system are based on annual Surveys of Foreign Holdings of U.S. 
Securities and on monthly data. Department of the Treasury/Federal 
Reserve Board January 19, 2010
SOURCE: http://www.ustreas.gov/tic/mfh.txt 
 
The American government may owe China $789 billion, but when it comes to foreign debt PER CAPITA (per person), economic debt in the U.S. could be worse.
 
This reminds me of facing my parents after receiving a bad grade in school (okay, that almost never happened!) and using the excuse, “But the other kids failed too!”
 
The response: “But we’re not the other kid’s parents!”
Yet, it’s comforting to know the debt per capita is worse in other countries:
·         Greeks: $27,746
·         Belgians: $27,023
·         Austrians: $26,502
·         Irish: $24,247
·         Norwegians: $21,402
·         Italians: $24,247
·         Dutch: $20,412
·         French: $18,946
·         Germans: $15,574
·         Finns: $13,617
·         Americans: $11.094
·         Danes: $9,410
America's dependence on foreign capital to fund its fiscal and external deficits is anything but a joke. And as the dollar has declined steadily -- not just in the past eight months but over the past eight-plus years -- global investors' willingness to continue to acquire and hold dollar assets has been open to question.
The latest Treasury International Capital data show that, notwithstanding growing criticism of American fiscal and monetary policies from abroad, foreign demand for long-term U.S. financial assets remains robust. And that's after deducting a steady exodus of American investors' money for foreign securities. http://www.ustreas.gov/tic/
Have you ever wondered who really reads that boring crap from the U.S. Department of Treasury? Well, now you know.
As the dollar weakens, America's purchasing power shrinks and the U.S. share of global GDP declines. Everything the United States imports, from petroleum to electronics, becomes more expensive. Because Americans import the vast majority of things they need, this could result in higher inflation and interest rates in the future. Ultimately, a weak dollar could cause living standards in America to decline.
The dollar's status as world reserve currency could also be in jeopardy. Recently, the United Nations, China, Russia and other nations have questioned that status, advocating replacing the dollar with another currency or a basket of strong regional currencies. GOLD isn’t looking so bad now. You may want to re-read that article.
 
If and when the dollar will be ousted as world reserve currency is the subject of much speculation. Right now, the greenback is still the most used for international transactions and constitutes more than 60 percent of other countries' official foreign-exchange reserves.
However, that percentage is steadily slipping. Several ideas are being bantered about regarding what currency could replace the dollar. The euro, Chinese yuan and a completely new international reserve currency appear to be top contenders. And while Europe or China may not be quite ready to take the lead as economic superpower right now, they are definitely moving in that direction.
 
A weak dollar makes imported products much pricier to buy here like Italian olive oil, imported wines, and Japanese products. A weak dollar does help many U.S. companies boost their overseas sales and makes domestic goods cheaper than imports at home.
For HOUSTON: A weak dollar increases tourism as more foreigners can afford to visit and spend money in the U.S.
 So maybe we should stop fighting that new Dynamo’s stadium and get focused on all of the great events and places to see in HOUSTON!
 
Contact James Hamilton: jhamilton31@comcast.net Or find me atTwitter   Houston’s Workplace Examiner   LinkedIN MySpace  
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Comments

  • Frank 4 years ago

    Thanks for putting our country's external debt in perspective, James. This should be a wakeup call for the United States as a whole and for us as individuals. We need to liberate ourselves from the constraints of "business,government, and life as usual." The U.S. can no longer take for granted its position as the world's dominant power. Our challenge is to succeed in the "new world order" of relative parity.

  • Tomas 4 years ago

    I agree with what Frank says.

  • Sara 4 years ago

    I am safely putting my money into gold, silver and copper. The United States dollar is in danger especially with the current administration spending it faster than it can be made. We have to learn to live within our means or we will all be speaking Asian.

  • Sami 4 years ago

    And we MUST stop whoring for oil.

    When I went to London, something cost 20 pounds. I think not bad, then I think oh wait, that = $40. And 40 pounds = $80, and so on ad naseum. I tell my British friends to come here, they can live like kings! ;)

    Thanks for putting the spotlight on what I like to think of as 'our dirty little secret.' They own us; it's not the other way around. What happens if the bubble bursts?

  • Elizabeth 4 years ago

    The only way to regain our position as the global superpower is to replace our current president with one who does NOT bow to foreign dignitaries, one who is NOT going to spend our nation into the worst financial disaster in U.S. History, and a president who will NOT tolerate the Congressional crisis of faith we are not suffering from.
    NoBama in 2012

  • Charles 4 years ago

    Okay, nice spin there at the end to make a more positive article, but can anyone in their right mind actually make it past the first 2 paragraphs? We owe China AND Japan more than $750 billion and no one else is freaking out about that?
    The second they say, "Hey, we'd like our money back now, or you can abide by these new rules..." we're screwed.

    Seriously a very scary, but informative article.

  • Samuel 4 years ago

    I don't understand some of this, but I can tell when we're broke and we owe way too much money to other countries ready to mess with us.
    Why are we only letting Asians loan money to us? There are legit shieks, African leaders we can trust, and other countries. Something doesn't seem right.

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