Posts Tagged ‘Borrowing’

Wonder what you would find if you frisked the foreign demand of United States Treasury bonds and notes?

Answer: It decreased by a record amount in December.

BBC News reports:

The Treasury said foreign holdings of US debt dropped by $53 billion, surpassing the previous record set last April.

China cut its holdings by $34.2 billion – meaning it is now the second-biggest US debt holder after Japan.

The drop in demand may mean that the US has to pay more to borrow, just as the government has to fund a record budget deficit.

In total, net purchases of long-term stocks, bonds and notes increased by $63.3 billion in December, down from $126.4 billion in the previous month, the Treasury said.

China was a net seller for a second straight month.

Its bond holdings amounted to $755.4 billion in December, down from $789.6 billion the previous month.

China has previously questioned whether the US bonds are safe and whether it can sustain its deficits. It has also questioned the US dollar’s role as the world’s reserve currency.

President Barack Obama earlier this month released a budget plan that expects the federal deficit for 2010 to be a record $1.56 trillion, surpassing last year’s record of $1.4 trillion.

Just great. This is definitely not good news and it is not shocking either, considering the fact that we are faced with two straight years of record federal deficits… Thank you President Obama.  If you think the White House plans on cutting government spending soon, you must have just escaped from a straight jacket, padded cell, and insane asylum. The 2010 and 2012 elections cannot come soon enough!

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