Need more evidence on how government meddling and spending can screw up the economy even more? An article by Richard Barley on the Wall Street Journal's website points out some salient but little-known facts:
"Is a hint of economic nationalism creeping into debt markets? Recent European bond sales, including issues by Belgium and Spain, show investors sticking close to home. If that becomes a trend it could prove awkward for those traditionally dependent on foreign investors...."
Why do we care about Europeans buying more of their own bonds and less of ours? Its rather simple: Obama needs them to finance his deficit spending.
"But if international flows do decline, it could cause concerns for those reliant on overseas demand -- particularly as debt issuance surges to combat the financial crisis. The U.S., where foreign Treasury holdings as of November 2008 were 53% of total marketable debt, and the U.K., where overseas investors held 36.3% of gilts by the third quarter of 2008, should be watching closely."
Over half of our treasuries are purchased by foreigners. Japan and China account for two-thirds of THAT amount. Obama is playing with fire as Geithner angers the Chinese by accusing them of currency manipulation and the President pushes for "buy-American" only provisions in the stimulus bill. Considering Obama needs their money to finance his deficit spending, the last thing he should be doing is starting up a trade war. If the Chinese and other foreigners choose not to buy our treasuries, the yields will shoot up and cause the economy to really nosedive, as interest rates on homes, cars, and credit cards will rise. Of course, when you've lived in the ivory tower all of your career as Obama has, one might not realize that lesson at first.
"Is a hint of economic nationalism creeping into debt markets? Recent European bond sales, including issues by Belgium and Spain, show investors sticking close to home. If that becomes a trend it could prove awkward for those traditionally dependent on foreign investors...."
Why do we care about Europeans buying more of their own bonds and less of ours? Its rather simple: Obama needs them to finance his deficit spending.
"But if international flows do decline, it could cause concerns for those reliant on overseas demand -- particularly as debt issuance surges to combat the financial crisis. The U.S., where foreign Treasury holdings as of November 2008 were 53% of total marketable debt, and the U.K., where overseas investors held 36.3% of gilts by the third quarter of 2008, should be watching closely."
Over half of our treasuries are purchased by foreigners. Japan and China account for two-thirds of THAT amount. Obama is playing with fire as Geithner angers the Chinese by accusing them of currency manipulation and the President pushes for "buy-American" only provisions in the stimulus bill. Considering Obama needs their money to finance his deficit spending, the last thing he should be doing is starting up a trade war. If the Chinese and other foreigners choose not to buy our treasuries, the yields will shoot up and cause the economy to really nosedive, as interest rates on homes, cars, and credit cards will rise. Of course, when you've lived in the ivory tower all of your career as Obama has, one might not realize that lesson at first.
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