Bloomberg reports today that China and Japan reduced their holdings of U.S. Treasuries again in January. In fact, China has been a net seller for three straight months.
“Chinese Premier Wen Jiabao this week sought assurances that the U.S. will protect the value of China’s dollar assets. At a press conference in Beijing marking the end of China’s annual parliamentary meetings two days ago, Wen said dollar volatility is a “big” concern and “I’m still worried” about China’s U.S. currency holdings.”
“Wen urged U.S. officials to “take concrete steps to reassure investors” about the safety of dollar assets, repeating concerns that he expressed a year ago, sparked by a growing U.S. fiscal deficit.”
“China’s share of U.S. bills, notes and bonds in January amounted to 24 percent of the total $3.7 trillion in Treasuries owned by investors abroad, up from 19 percent three years ago, according to Treasury data.”
With record Obama deficits, unsustainable national debt, and gigantic unfunded liabilities from welfare programs like Medicare, Medicaid, and Social Security inflation is a real threat. Add to that the demographically certain bankruptcy of these programs, the worry becomes all the more acute. Instead of a sober attempt to remedy the situation we have a socialist president on a hell-bent-for-leather campaign to add to welfare with Obamacare’s takeover of 16% of the U.S. economy. So Obama’s answer to a non-economic, non-functioning welfare system is to add a gigantic new program to it. How, with gimmicks and double counting!
If your a creditor with long-dated U.S. paper it’s reasonable to think you will be paid back with devalued dollars. And given the uncertainty caused by Obama’s socialistic, statist push of the economy, it’s reasonable to think that American consumers will not be back to buy your exports anytime soon. How can they, they don’t have jobs!
In short, our creditors should worry. And we should worry all the more!
Tom Motherway