The Homa Files

Ken’s Take: The ballooning deficit and national debt raise two mega-worries: (1) An eventual increase in interest rates as it gets increasingly difficult to find buyers for US bonds, and (2) the increasing dependence on foreign buyers of the debt – especially China.  Neither should be taken lightly …

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Excerpted from NY Post,”The Never Ending Pork Parade”, July 4, 2009

Thanks to ongoing trade deficits and relentless borrowing, America’s financial status is deteriorating rapidly.

• The Commerce Department reported last week that:
• The value of foreign assets owned by Americans is $19.89 trillion,
• The value of American assets owned by foreigners is $23.36 trillion.
• So, we are a “net debtor” to the tune of $3.47 trillion. 
• Foreigners, most significantly China, own nearly 50 percent of our government’s public debt.

So while the Obama administration frets that we are dangerously dependent on foreign oil (Note: Canada sends us as much oil as the Persian Gulf region, and Mexico not much less), we are increasingly threatened by dependence on foreign bondholders who could wreak havoc on the dollar and our interest rates far more easily than OPEC could cut off our oil.

Full article:
http://www.nypost.com/seven/07042009/postopinion/opedcolumnists/the_never_ending_pork_parade_177485.htm?page=0

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This entry was posted on July 20, 2009 at 7:50 am and is filed under Financial Crisis, Obama Administration. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.