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Who holds our IOUs?(Insider Report)
As the Bush administration prepares to sink another $87 billion into Iraq (merely a down-payment on projected costs of the open-ended occupation) and quietly prepares for annual deficits surpassing $500 billion, Americans may ask themselves: Who holds the federal government's IOUs? An important clue was offered by Treasury Secretary John W. Snow's recent itinerary, which took him to Beijing and other Asian capitals.
Foreign investors own between one-fifth and one-quarter of the U.S. government's debt, with Asian investors owning the greatest share. The August 4th Wall Street Journal reported: "At the end of May, Japan was the largest foreign owner of Treasurys with a holding of $429 billion. That position reflects the investment of dollars obtained from Japan's $27 billion trade surplus with the U.S.... But gaining fast is China, which has surpassed Japan in terms of having the largest trade surplus with the U.S. at $44 billion. Chinese investors have the second-largest foreign holdings of Treasurys at $122 billion, more than double the amount that nation held in 2000."
"It has been widely reported that the U.S. must take in about $1.3 billion a day--about $55 million an hour--in foreign investment to finance its overseas debt," reported the July 15th Asia Times. "If that river of money falters or dries up, the difference must be made up by an inexorable fall in the value of the U.S. currency. Indeed, if it had stopped already, the fall in the U.S. stock market ... would have been catastrophic."
That catastrophe may be nigh on arrival. In recent months, "as investors have become more optimistic about economic ...
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Source: HighBeam Research, Who holds our IOUs?(Insider Report)