Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (50402)	1/20/2006 11:35:26 AM
From: shades	Respond to of 110194

today.reuters.com NEW YORK, Jan 19 (Reuters) - The United States' increasing indebtedness to the rest of the world isn't a major concern as foreigners are still more than willing to invest in the country, a senior Treasury official said on Thursday. "It is something we watch closely but it is not anything of pressing concern," Robert Kimmitt, deputy secretary of the Treasury, told the Council on Foreign Relations in New York. The U.S. current account deficit is widening as imports continue to outpace exports, meaning that U.S. consumer spending is increasingly being financed from abroad. But there will always be demand for U.S. assets and debt, from both the private sector and foreign governments, because the United States has the most liquid and deepest capital markets in the world, Kimmitt said. The central banks of many Asian and oil-producing countries -- particularly China and Japan, whose reserves both exceed $800 billion -- hold large quantities of U.S. debt as part of their foreign-exchange reserves mountains. Although these institutions hold assets denominated in other currencies and therefore already manage diversified portfolios, Kimmitt doesn't expect them to dump their dollars. "It certainly wouldn't be in their interests to do anything that would hurt the U.S. market in which they're already heavily invested," Kimmitt said. Foreign investors hold around $2.5 trillion more of U.S. assets than U.S. investors' asset holdings overseas. Kimmitt reiterated Treasury's line on China and its currency, namely that Beijing's 2.1 percent revaluation of the yuan last July was welcome but that greater steps toward letting the currency float freely are needed. "More needs to be done and more needs to be done quickly," as a free-floating currency would be in China's interests, Kimmitt told reporters. Treasury is in constant dialogue with China and other countries to promote the freeing up of currencies, trade, capital and investment flows, he said. As far as domestic issues are concerned, Kimmitt said the priority for Treasury remains reducing the budget deficit. "I'm really concerned about the deficit. It's much too large and it has to become smaller," Kimmitt said, adding that cutting spending should be the focus. He said, however, that the deficit is "moving in the right direction" toward President George W. Bush's goal of being halved by 2009. The U.S. fiscal deficit in the year to September 2005 was $319 billion, less than 3 percent of gross domestic product and down from a record $427 billion the year before. But earlier this week, the White House said it expects post-Hurricane Katrina spending to push this year's deficit back out to more than $400 billion.