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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (27273)	9/9/2003 2:53:36 PM
From: lurqer	Read Replies (1) \| Respond to of 89467

Good God look at this! On a seasonally adjusted basis, growth of federal debt held by the public jumped to 24-1/4 percent at an annual rate in the second quarter, after having risen just 2-1/4 percent in the previous quarter. Over the first half of this year, federal debt grew at a faster pace than last year. from federalreserve.gov While appalling by itself, there are some international ramifications of this level of borrowing that are rarely discussed. The neo-cons, like their progenitor Dr. K., have never grasped the economic component to world power. Today, we see that the US Senate is going to pressure China with threatened punitive tariffs, if they don’t reevaluate their currency. But the necessity of funding the massive Federal debt, precludes the application of pressure and renders any threat as hollow. The quote Economists fear that Asian investors, who are the largest foreign owners of US Treasuries, may cut their holdings of US government debt, withdrawing a key source of financing for America's large current account deficit. from news.ft.com exhibits the general problem. To get more specific, we need to consider China’s response when this reevaluation talk first started last month. Unfortunately, the link to the Yahoo Financial News on this topic has expired. However, I was able to find China invests the bulk its foreign exchange reserves, which have hit $346.5 billion, in dollar assets, but the government has never published details of its holdings. and in reference to changing its foreign exchange reserves account, Zhao Xijun, deputy head of the Finance and Securities Institute at People's University, asks "Why can't we buy more assets denominated in euro and yen?" and "On the other hand, if the United States continues to groundlessly demand a renminbi revaluation, China may raise the possibility of such considerations," Zhao said. Interestingly in this same article is the quote "The Chinese may not be happy with U.S. pressure, but I don't believe they would go as far as to make threats such as reconsidering buying of Treasuries," said a senior U.S. forex dealer based in Shanghai, who declined to be identified. from forbes.com while the rest of the article contradicts this assertion. Is this another case of myopic denial? JMO lurqer