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Foreigners Reduce Holdings of US Debt by Record Amount

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posted on Feb, 16 2010 @ 11:50 PM
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Foreigners Reduce Holdings of US Debt by Record Amount


blogs.abcnews.com

Foreign owners of US government debt reduced their holdings by the largest monthly amount ever in December, with China offloading so many Treasury securities that it is no longer the largest foreign holder.

...foreign holdings of Treasury securities plunged by $53 billion in December, a record drop. China led the sell-off, reducing its holdings by $34 billion.
(visit the link for the full news article)




posted on Feb, 16 2010 @ 11:50 PM
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Japan has regained its former position as the No. 1 foreign holder of US debt. Seems China didn't dig the Prez's Taiwan moves and meetings with His Holiness the Saffron-Robed Medieval Potentate. Or maybe they are wising up to the fact that the US is in hock up to its eyeballs and regardless of whether they keep buying, it will all end in tears.

If this trend accelerates, the US will have to raise interest rates to attract foreign borrowers, which will of course crimp the so-called "recovery." Choppy waters ahead, folks. Batten down the hatches. But you knew this was coming, didn't you?

Protip: When in your backyard bunker, its worth remembering that canned ham tastes better than canned beans.

blogs.abcnews.com
(visit the link for the full news article)



posted on Feb, 17 2010 @ 12:24 AM
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reply to post by silent thunder
 


I hope that the Sweet Nothings the Dalai Lama whispers into Obama's

ear is worth it, Maybe the Dalia will step up and buy the T-bills at

the next auction.



posted on Feb, 17 2010 @ 12:46 AM
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I've been waiting for this to happen. There's talk and then there's action, $34B in action. The next big show is the Commercial Real Estate bubble which is already starting to burst but the big burst hasn't happened yet.

Bunker-up (or Bunker-down?) my friends.



posted on Feb, 17 2010 @ 12:52 AM
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Just a simple question.

I'm not to familiar with treasury securities & auctions, but who does the Chinese sell our debt to?

Back to us? or other countries?

Thanks



posted on Feb, 17 2010 @ 01:03 AM
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Originally posted by TrainDispatcher
Just a simple question.

I'm not to familiar with treasury securities & auctions, but who does the Chinese sell our debt to?

Back to us? or other countries?

Thanks


Anyone on earth with access to a computer and a little bit of money can log on to a trading platform and buy US treasuries. Buyers include individuals, corporations, fund managers, private banks, nations, and soverign wealth funds, among others. Despite their increasingly-tarnished reputation, US treasuries still have a nonzero value and many still consider them a "safe haven" from risk, or at least an important part of a diversified portfolio.

However, its worth remebering the rather unsavory fact that in 2009, the Federal Reserve bought 80% of U.S. debt.


[edit on 2/17/10 by silent thunder]



posted on Feb, 17 2010 @ 01:44 AM
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My question would be..

Is a reduction in Foreign holdings what Americans want?

Regardless of issues it causes, if this is what the American people want then it can only be good news!

From a Briton who is not impressed with Gordo and this Gov we have selling the family silver, the beds, the front door and infact anything he can get his grubby hands on..

Sometimes I think it better to be a little broke and work your way out of a mess than sell everything off to simply stand still..



posted on Feb, 17 2010 @ 01:53 AM
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This is for December though. What about January and Feb?

We didn't piss off china until recently with the weapons sale.



posted on Feb, 17 2010 @ 01:57 AM
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Originally posted by thoughtsfull
My question would be..

Is a reduction in Foreign holdings what Americans want?


Well, its a bit hard to say what 300,000,000 people want...obviously different people want different things.

The government is addicted to debt, and people are addicted to cheap goods. Without the ability to borrow cheaply from countries like China and Japan, consumer goods would be much more expensive and credit would be harder to come by.

I look at it a bit like the attitude of a hard-core alcoholic. The alcoholic "wants" another drink, but his liver desperately wants him to quit. The quitting process is quite unpleasant and involves a long period of painful physical and psychological pain and and adjustment. But there is no question that in the long term, making an alcoholic quit now gives him a better chance of survial and relatively less pain than letting him drink for another five or ten years, however superficially pleasant that time may seem to his befuddled brain.



posted on Feb, 17 2010 @ 02:13 AM
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I made a thread on this topic some time ago. I thought it would interest people who'd like to know a little more about this whole thing:


This is indicative of how dangerous the Chinese holdings of U.S. debt are. It is a huge financial weapon that the Chinese can use anytime they choose for any purpose they choose. But by selling only selective debt, rather then selling various random chunks of their U.S. debt, the Russians have brought to the attention of the Chinese, if they hadn't thought of it already themselves, how to launch a limited financial nuclear attack by getting them to focus on a particular type of debt, such as Fannie Mae or Freddie Mac. Such a surgical strike would do much to protect the overall investment the Chinese have in U.S. debt, but at the same time cause a severe headache for the U.S.


This is a headline from 2007:


China may sell off Treasury bonds if US imposes trade sanctions

The Chinese government has hinted that it may liquidate its vast holding of US Treasury bonds, potentially triggering a crash in the dollar, if Washington imposes trade sanctions to force a yuan revaluation, The Telegraph reported.source


These articles exemplify how China controls the US through its vast holding of treasury securities currently equaling approximately $790 billion, making it the largest foreign holder of US debts.

So why would countries buy US debts? For long US debts have been a relatively safe and profitable investment. Americans and their government could spend like no other country could as there were always countries willing to pay for these costs (through buying US securities) After all, the largest economy could not go bankrupt; the US was expected to have plentiful resources to pay off its debts. In other words, the US was seen as 'too big to fail'.

Until recently. For a long time it is being questioned whether the US would ever be able to pay off its debts. Simultaneously, the Fed increases the money supply and as they have stopped publishing M3 money supply data, it is hard to exactly determine how much money is in circulation, but it is believed to be very significant. This allows the Fed to pay off debts but it also pressures the value of the Dollar in a downwards spiral, which naturally affects the stability of the American economy and the trust that investors such as China have. The crisis has only confirmed the suspicion regarding the instability of the American economy.

My explanation indicates that China finds itself in between a rock an a hard place. Being the number one foreign debt holder, its investment is so big that it wouldn't benefit from an American economic collapse. Additionally, it would lose one of its biggest customers. This loss could not yet be ''absorbed'' my China's middle class. In the long-term this would be a viable solution, but right now not, making it obvious that China wouldn't benefit from a direct American economic collapse.

However, in theory China holds the key to make or break America. In recent years there have been rumors about China considering to dump its US treasury securities. This alone already triggered panic on stock markets and thus, indicates the impact such a move would have.

So what does China do? First of all, they have started diversifying away from the Dollar. It has invested in precious metals such as gold but also in other currencies such as the Euro, alike Russia. Second, they have stopped increasing their investment in US securities, making their total investment hovering around a maximum of 800 billion Dollars. At the same time, debts continues the grow, but who is going to fill up that 'gap'. Japan has its own economic trouble and emerging powers are way too weary to invest in US debts. Obviously, this increases the fear that the US won't be able to pay off its debts.

By spending like no other country could, America has sold its soul to the devil. Yes, it brought wealth, extreme wealth, but its downside is now showing up. The greed of those in control has spun out of control resulting in an uncontrollable deficit and foreign control on US freedom of political/strategical movement. This is only the beginning, it's going to get worse and worse.

China has started exploiting their problem by threatening the US to start dumping its Treasury securities and hence, instigating an inevitable market crash. This would bring the US on its knees, exactly what an emerging superpower as China wants, but as I mentioned before: China is politically, economically and militarily not ready for this step. Such an event would create enormous chaos domestically (due to unemployment) nor would the Chinese economy be able to cope with such an event (yet).

However, what they can do is launching small economic attacks to effectively keep the US terminally ill. This keeps them to a certain extent in control, at least in such away that they cannot maneuver freely by for instancing imposing sanctions without anyone stopping them. The fact that Russia and China jointly launch such attacks shows how much they want to limit US control over the world.

This is why it didn't come as a surprise that Obama wants to radically reduce the national debt, but I doubt it is still possible to make the pumps work hard enough to prevent the ship from sinking.

Either way, the tables have turned. This is not only muscle flexing, China is showing that America should think twice before messing with them. For long, China was in no such position, but it is clear that they have grown strong enough to behave in such a way.


source


Source: Paulson: Russia Tried to Get China to Blow Up Fannie and Freddie

Another interesting thread on this topic: The US is borrowing itself money through Caribbean banking centers


I recently read the following quote and unfortunately I think it is illustrates very well the events we are experiencing:

The 'American Empire' has peaked, is on a decline
Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent ... overspends ... costly wars ... wealth inequity and social tensions increase; and society enters a secular decline."





[edit on 17-2-2010 by Mdv2]



posted on Feb, 17 2010 @ 02:42 AM
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Originally posted by silent thunder

Originally posted by thoughtsfull
My question would be..

Is a reduction in Foreign holdings what Americans want?


Well, its a bit hard to say what 300,000,000 people want...obviously different people want different things.

The government is addicted to debt, and people are addicted to cheap goods. Without the ability to borrow cheaply from countries like China and Japan, consumer goods would be much more expensive and credit would be harder to come by.

I look at it a bit like the attitude of a hard-core alcoholic. The alcoholic "wants" another drink, but his liver desperately wants him to quit. The quitting process is quite unpleasant and involves a long period of painful physical and psychological pain and and adjustment. But there is no question that in the long term, making an alcoholic quit now gives him a better chance of survial and relatively less pain than letting him drink for another five or ten years, however superficially pleasant that time may seem to his befuddled brain.


I understand, 300,000,000 is quite a big number, but I think quite a large number of people are begining to see that we are all on a slippery slope, that just keeps getting greased by those who profit from all this mess..

Selling off the family silver is never a good idea as you have nothing left to fall back on.. These bailouts have simply tried to keep us at a standstill, not very sucessfully I might add.. some times the demise of one system gives rise to a better one.. short term pain over long term hardship.. I know NOW which I would choose..

I hope more people wake up to seeing that we need to let the past go and create the world anew (bit of Thomas Paine there)



posted on Feb, 17 2010 @ 02:44 AM
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reply to post by silent thunder
 


great analogy, sounds like you took a page right out of ron pauls book.



posted on Feb, 17 2010 @ 02:48 AM
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reply to post by Mdv2
 


The issue is being in Debt to another nation, if you look at the debt the UK got into with "Lend/Lease" and the loan to help rebuild Britain post WW2 (paid off Dec 2006)

All in all that debt could be said to have played a large part in the process of breaking Britain that led to the demise of the Empire (not such a bad thing)

But if we are honest that debt enabled the US to step into that Global Vacume, and I fear the same will happen with the US and China.. debt servitude is not a great position to be in when it is at a national level.


[edit on 17/2/10 by thoughtsfull]



posted on Feb, 17 2010 @ 06:15 AM
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Originally posted by thoughtsfull
My question would be..

Is a reduction in Foreign holdings what Americans want?

Regardless of issues it causes, if this is what the American people want then it can only be good news!


What the American people want is irrelevant. Capitalists (those with capital) call the shots and make or break nations.



posted on Feb, 17 2010 @ 06:23 AM
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All we need to do is print more money and give the Chinese and Japanese and Saudis in cash.



posted on Feb, 17 2010 @ 06:25 AM
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Isn't USA's debt to GDP ratio considerably smaller than the Japanese, UK and other powerful countries?



posted on Feb, 17 2010 @ 06:28 AM
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reply to post by saabacura
 


Well, you are taking them for a fool that they are not. Besides, you are actually printing more cash. And that's why they'll dump their US holdings in trickles. When it's all done, the US will face two problems: hyperinflation and currency collapse.



posted on Aug, 29 2010 @ 03:02 AM
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Originally posted by eldard
reply to post by saabacura
 


Well, you are taking them for a fool that they are not. Besides, you are actually printing more cash. And that's why they'll dump their US holdings in trickles. When it's all done, the US will face two problems: hyperinflation and currency collapse.


You see, there are no replacement of US dollar... No matter what you say. You see... Euro is based on ideals that don't work in real life. People's fanatsy...

The only real thing that works in this world... is the United Stated of America's Dollars

[edit on 29-8-2010 by saabacura]



posted on Aug, 29 2010 @ 02:56 PM
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Originally posted by saabacura

Originally posted by eldard
reply to post by saabacura
 


Well, you are taking them for a fool that they are not. Besides, you are actually printing more cash. And that's why they'll dump their US holdings in trickles. When it's all done, the US will face two problems: hyperinflation and currency collapse.


You see, there are no replacement of US dollar... No matter what you say. You see... Euro is based on ideals that don't work in real life. People's fanatsy...

The only real thing that works in this world... is the United Stated of America's Dollars

[edit on 29-8-2010 by saabacura]


You better hope and pray there is something to replace the dollar. And to say, it`s the only real thing that works in this world, is wrong. It doesn`t work, that is the problem. It`s about a hair from falling apart right now. The government can dump trillions of dollars into the system, but, it`s beyond fixing now. Besides, dumping more cash out there, will only bring it down even faster.




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