Russia reduces its U.S. debt holdings by almost 30%

June 21, 2011 by · 1 Comment
Filed under: Global News 

Truth be told, Russia is not a super-major debt holder for the United States.  But, in these times of uncertainty with out debt ceiling, Greek crisis and effects of Japan over the next 6-12 months, this does not bode well.  Right now a substance more precious than gold is in short supply, and that is confidence.  Having any major trading partner, reduce there exposure to your debt by that much is not a good sign for what they figure is more likely than not in our future.    An outright default is very very unlikely.  Increasing the monetary base to reduce our debt load is much more likely and they is a driving reason for Russia’s debt reduction move.

I just don’t see the political will in our current configuration to take the real needed steps to reduce not only the size of government but also the amount of spending that is projected.  It is totally unsustainable.   How do we reduce it?  We had major trouble just to cut $34 billion from our last budget of over $1.5 trillion.  If we could not even handle that, then what would tell us as a people we can do real cuts.  What is sad is that Bush spending (minus war) looks tame to what we are dealing with now.   My conclusion is that we will have to go through a major economic shock in the system where many people will be affect in ways we have not seen in 30+ years to get people motivated to come up with a plan that will work for us and doesn’t require us to continually go into debt to execute it.  This is possible.

The Street – A top Russian economic official says his country is likely to continue decreasing the share of its portfolio that consists of U.S. debt, according to a published media report. “The share of our portfolio in U.S. instruments has gone down and probably will go down further,” said Arkady Dvorkovich, chief economic aide to Russian President Dmitry Medvedev, according to a report on The Wall Street Journal’s Web site.

Dvorkovich made the comments on the sidelines of the St. Petersburg International Economic Forum, the report said.

Foreign countries’ interest in purchasing U.S. debt has become an important concern as the U.S. government is running large deficits and must finance them by selling Treasuries. A weakening appetite for Treasuries would drive up the cost of Washington’s borrowing.

One recent source of Treasury demand, the Federal Reserve’s QE2 program, is scheduled to come to an end later this month.

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One Response to “Russia reduces its U.S. debt holdings by almost 30%”
  1. Ron says:

    Please be specific and state what the government is now spending on that has increased the debt over and above what Bush spent. It appears to me that what we are spending on are for the most part programs initiated by Bush such as the two Wars, Part D Drugs, Tax cuts for the wealthy, tax loopholes for special interests like Oil, the TARP bailout to the banks, payments to welfare Red states that pay less in taxes than they receive from the federal government. Let’s not forget the interest on raising the debt from a surplus to 10.67 Trillion under Bush. Yes, Obama had his stimulus, but even that has just been proven to have created twice the economy than it cost.

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