China Doesn’t Just Buy U.S. Bonds

 

There’s often a misconception that China owns most of the U.S. debt.  They aren’t anywhere close to holding the majority of our debt.  Don’t get me wrong, I don’t think any foreign entity or person should hold U.S. debt.  But, they do, and we hold some of other nations’ debt as well. 

Towards the US debt, we have about $16 trillion in debt.  But, about 1/3 of that is held by foreign entities.  Sorry about the clarity of this graph, but notice the total number.  Now, this was 2010, so the total U.S. debt was 2-3 $trillion less then.  So we can say about 1/3 of US debt is held by foreign entities.  Of that, China holds about 25%.

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Now, that should be the end of the post.  This dispels the notion that China owns most of the U.S. debt.  But, that’s not the end of the story.  Or, even a true beginning. 

I don’t want China to buy our debt.  I don’t want anyone to buy US debt.  Once this happens, we are in a sense, and in reality, beholding to the people who buy our debt.  Obviously, other people see things differently. 

In fact, Germany wants to reassure China that the Euro is solid

Germany’s Angela Merkel makes her second trip to China in half a year this week, hoping to strengthen booming trade ties and obtain assurances from Beijing that it will support the fragile euro zone by buying the bonds of its stricken southern members.

German officials say the talks will cover a wide range of issues, from energy, climate and cultural links, to sensitive subjects like Syria.

But the focus for Merkel and her delegation – which includes some 20 top executives from bluechip firms like EADS <EAD.PA>, Siemens <SIEGn.DE> and Volkswagen <VOWG_p.DE> – will be reassuring Chinese leaders about the stability of the euro zone and Germany’s determination to keep it together.

“We need to convince China, as we do other investors, that euro investments are stable and secure,” a senior aide to Merkel told reporters on Tuesday in Berlin.

Big Chinese investors were forced to take substantial losses on the Greek bonds they held earlier this year when Athens pushed through a debt restructuring backed by its European partners, including Berlin. German officials now acknowledge that this hit Chinese confidence in the currency bloc.

On Thursday evening, Merkel will participate in a dinner with China’s central bank chief, finance minister and the head of its $480 billion sovereign wealth fund, to try to convince them Greece was a one-off and that battered Spanish and Italian bonds are attractive, aides say.

Still, Beijing has stopped short of offering specific commitments of cash to help shore up European banks or sovereign borrowers and Merkel is unlikely to receive more than encouraging words in Beijing.

The reality is that China’s interest in Germany has soared over the past decade, but at the expense of other countries in Europe. While Germany’s power and influence have grown as the crisis has deepened, France is seen in China as weakened and Britain marginalized.

There is more to the link but, I’ll stop there.  In my estimation, Britain is looking less and less marginal.  Germany has taken front view, but some of that view isn’t what we want to see.  They want/need China to buy the debt because?

It’s been 5 years.  In the US, we worry because we haven’t jumped but have only had vers small gains.  South Europe only loses. 

I firmly believe the southern nations would be better off defaulting and then printing their own money.  Yes, the US and the rest of the world would take a hit.  But, we’re in a position to absorb it.  But, if we continue to send capital down the money holes the the problem continues to get larger.  The time to stop is now. 

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29 Responses to China Doesn’t Just Buy U.S. Bonds

  1. DirkH says:

    Germany doesn’t need China to buy our debt. We want China to buy the debt of France, Italy etc.

    China has over the past 2 years or so reduced their holdings of US debt and Japan has taken the lead. At the same time China has started looking for, amongst others, Europe to buy debt there.

    All European nations have spiralling debt. They all have too many government employees. Decimate them and you thrive. Don’t, and you die.

    You got too many as well. You won’t even notice when you fire 10 % of them.

    Here’s a great example.
    Mark Levin and a caller from the DoE, 2009:

    • suyts says:

      Exactly, but when it is all tied to the Euro, it effects all within the Eurozone. It isn’t Germany, but the money Germany has tied to everyone else.

      To be clear, yes, we also have too many cleptocrats. They take from everyone, and produce nothing.

  2. kelly liddle says:

    Well I would say to the Chinese offload that stuff as quickly as you can and I think they are, buying other stuff, but there is lot of paper to move. Noting they are buying more real Aus assets than US assets. If the argument is that China is helping your government to do stupid things and making the situation worse I can sympathise with that but it is still the fault of the US.

    • philjourdan says:

      It is indeed! What China is doing is enabling the US spending binge. LIke giving drugs to a junkie. China has to sell a ton of stuff to keep its people “fat, dumb and happy”, and the US is willing to accomodate. So China is making sure the accomodation is maintained. I am sure China can find a better investment than the US debt, but someone has to keep the US from defaulting, and they do earn a small stipend for doing so.

  3. kim2ooo says:

    OT

    Climate Depot responds to Mann and his lawyer’s claims about the Hockey Stick & Climategate

    Climate Depot’s Exclusive Report Challenging Michael Mann’s climate claims
    http://www.climatedepot.com/a/17202/Michael-Mann-says-lawsuit-against-National-Review-is-on-Climate-Depot-responds-to-Mann-and-his-lawyers-claims-about-the-Hockey-Stick–Climategate

    • ThePhDScientist says:

      Climate Depot Response: Mann’s research has been subjected to nearly a decade of intense scrutiny by his colleagues, climate researchers and institutions. See: 2010: Head of UK Royal Statistical Society Prof. David Hand: Michael Mann’s ‘Hockey stick’ graph was exaggerated — ‘The ‘hockey stick’ that became emblematic of the threat posed by climate change exaggerated the rise in temperature because it was created using ‘inappropriate’ methods…would have shown less dramatic results if more reliable techniques had been used to analyze the data’

      Ahh more of that conspiracy theorizing that’s sooo core to making the whole DENIALISM scheme work.

      • kim2ooo says:

        The links [ MANY ] are there….Form peer-reviewed science.
        Do you deny them?
        Can you debunk their claims?

        Liberals don’t know the meaning of DENIAL-ISM.

      • DirkH says:

        ThePhDScientist says:
        August 29, 2012 at 5:22 am
        “Ahh more of that conspiracy theorizing that’s sooo core to making the whole DENIALISM scheme work.”

        It is not a theory but a fact that consensus climate scientists conspire. The proof is in the climategate e-mails, which are in circulation since 2009. The fact that you missed that does not make you less wrong.

    • ThePhDScientist says:

      Trust these people too Kimmie? You up to be the subject of a real life experiment? See if their denialist science holds true?

      http://www.virusmyth.com/aids/

      • kim2ooo says:

        ThePhDScientistontheshortbus
        As usual….. A strawman fallacy.

        So predictable.

      • kim2ooo says:

        BTW: What do you think gives you the right to be forward enough to call me Kimmie?

        Are you some sort of predator?

        • ThePhDScientist says:

          No that’s you remember. Chris Hansen stay AWAY Kimmie!

        • kim2ooo says:

          ThePhDScientist says:
          August 29, 2012 at 7:56 am

          No that’s you remember. Chris Hansen.

          zzzzzzzzzzzz
          Is that your BFriend ? You seem very taken by the predatory Chris Hansen.

          Show some respect for yourself.

      • DirkH says:

        PhdScientist, do you want to imply the National Review is not trustworthy when they report a halt in production of the Volt?

        Thanks, Kim, for the link; I’m always interested in the electric car market.

        (Electric vehicles actually make a whole lot of sense once they will have noticed that electricity can move faster than a car. PhdScientist, that remark is not a riddle for you. Just ignore it.)

  4. kim2ooo says:

    Nemesis, remember, is not just karma, but payback with an absurd twist. ” 🙂
    http://www.nationalreview.com/articles/315161/liberal-chickens-victor-davis-hanson

  5. kim2ooo says:

    Actually, No!

    He’s the leftards and Mr OBAMAS HERO….

    You see, they can’t discuss Mr Obama’s shortfalls…without bringing in a Bush

  6. kim2ooo says:

    Sooooooooooo…Can the DNC get anything right?
    Just who does the DNC align itself with?

    [“It is troubling that the Democratic National Convention has decided to promote and lend its name and national political platform to the organizers of the “Jummah at the DNC”. The leaders of this event – Jibril Hough and Imam Siraj Wahhaj as advertised are no moderates. They are radicals. These individuals embrace Islamist supremacy and have demonstrated support for radical ideologies.

    A quick Google search by the DNC would have shown them that Hough and Wahhaj are leaders in the separatist American Islamist movement. While they may be able to get a few thousand Muslims to attend the event, they are NOT going to be mainstream Muslims. Most will likely come from Hough and Wahhaj’s radical networks that have long been entrenched in the Charlotte area. Make no mistake they are part of the Islamist movement.

    This is not about their right of assembly; this group under a different name pulled the same stunt at the US capitol in 2009 claiming 20k and getting 2-3k. THIS IS ABOUT the DNC calling this an “official function” listing these radicals as typical of the DNC community and more importantly about this organization speaking out AS representing supposedly typical American Muslims (or “Mainstream”).

    If that is who the DNC is consorting with then all Americans, Democrats should be concerned. There are many patriotic Muslims who are part of both parties, and when radical ideologues like this do a demonstration of “solidarity” in the name of our faith and choose an imam like Siraj Wahhaj who I saw with my own eyes in 1995 seditiously say it his duty and our duty as Muslims to replace the US Constitution with the Quran- then we need to speak up!

    Their jummah (group) prayer is supposedly against the Patriot Act, the NYPD, and Islamophobia and is actually NOT about our democracy but about empowering their Islamist and MB sympathetic groups into the very fabric of the political system so that Americans become anesthetized. We need American Muslims to speak up and marginalize these radicals. The DNC needs to understand and reject them because of their radical history and ideas.

    They use our American Muslim identity to speak as “one community” as a political unit or as a “bloc vote” – a political Islamist party when in fact most us Muslims don’t want that political unity and seek reform against their ideology that seeks to hijack our community. They do not represent us.

    For more on Jibril Hough please review AIFD’s piece “Connecting the Dots of Islamism-Jibril Hough, the Islamic Political Party of America (IPPA), and the Jamaat al-Muslimeen (JAM)” or listen to Dr. Zuhdi Jasser’s March 8, 2010 interview on the Keith Larson show on WBT Charlotte. Jibril Hough phones in half way through.’]

    http://aifdemocracy.org/2012/the-trouble-with-jumah-at-the-dnc/

  7. Pingback: » China Doesn't Just Buy U.S. Bonds | suyts space

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