China losing taste for debt from U.S.

January 8, 2009 by · Leave a Comment
Filed under: Global News 

It is not just China that is losing their appetite for U.S. sovereign debt, its basically the whole world that is fed up.  The world is not going to sit back with all its problems and fund us to be the consumers of the world.  That is not the path to global prosperity.

You don’t have an island with a bunch of people with limited resources and then assign one guys jobs as the person who eats.  It makes no sense and it won’t stand my spotlight or public opinion over time and that is what counts.

News:

China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.

On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s.

In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.

But now Beijing is seeking to pay for its own $600 billion stimulus — just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

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