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Sept 12, 2010
by Don Azarias
For your information, China is now the largest holder of U.S. Debts. It now owns the bragging rights as the largest creditor to the most powerful country in the planet. China now owns nearly $1 out of every $10 in U.S. public debt. While the United States is also largely indebted to Japan, Russia (yes, Russia), Britain, India and the European Union, it is also heavily indebted to public entities and to domestic and international private individual investors and institutions. But analysts said China’s holdings are so vast that the existence of a larger
stakeholder in the United States now seems remote.
As the US government spends an unprecedented amount of money to fix the nation’s economy, there is an equally great need to raise the cash to pay for it. This is accomplished through borrowing, whereby the United States sells Treasury securities with varying maturity dates.
For investors, the U.S. treasury bills, notes and bonds are considered a safe investment vehicle because they have a guaranteed rate of return, backed by future U.S. tax revenues and good faith. This borrowing adds to the national debt, which has climbed above $13 trillion and is rising every day.
To President Barack Obama’s and Democratic Party’s supporters, you are reading it right. Don’t blame Republicans for trying to prevent the impending financial collapse of the United States due to Obama’s and Democrats’ reckless spending of cash that the United States does not have. They are willing to sacrifice the financial well-being and future of the United States as a nation in order to remain true to their Party’s platform of providing unaffordable social services and welfare programs for all regardless of long-term consequences. You may remember that even Fed Chairman Ben Bernanke said that the amount of U.S. Debts is unsustainable. Is anybody out there listening?
Erskine Bowles, former White House chief of staff under President Bill Clinton and a co-chair of the bipartisan National Commission on Fiscal Responsibility and Reform (NCFRR), also presented an equally dire prediction: “If we don’t solve the debt problem, we will be paying $1 trillion in interest in 2020. This debt is like a cancer growing within the country. To fix it, we’ve got to make decisions that are politically tough.”
Bowles is right on target. Polls show that majority of the Americans are more concerned about the federal budget deficit than any other problems related to the economy.
Where are the jobs created by the $700 billion stimulus program? Why is it that the unemployment rate still remains at 10 percent? It’s an obvious Obama Administration failure. And now, Obama is proposing a $50 billion worth of infrastructure plan. If the $700 billion plus didn’t work, what makes him think that $50 billion will? Please, Mr. President, don’t insult our intelligence.
I’m outraged everytime I hear short-sighted and ignorant commentaries against Republicans for trying to fiscalize an out-of-control spending by Democrats. I cringe everytime I read newspaper editorials, mainstream and ethnic, heaping praises on Obama and Democrats for trying to bankrupt the United States of America while demonizing the well-intentioned Republicans.
The growing dependence on Chinese cash is giving Beijing an extraordinary say and sway over the U.S. economy. According to analysts, if China were to stop buying or, worse, start selling U.S. Debts, it would also quickly raise interest rates on a variety of loans in the United States. I hope Obama and Democratic Party supporters are reading.
China is now the major source of funding of the $1 trillion annual U.S. deficit and massive government bailout of the financial system. It is doing so in part with money earned from exports to the United States, which last year imported five times as much as it exported to China. That’s because China’s purchase of U.S. bonds makes the dollar stronger, particularly against the Chinese yuan, which has been kept artificially weak to boost Chinese exports. The relatively weak yuan remains one of the biggest obstacles to U.S. companies tapping the market in China that’s now in the midst of a lucrative $586 billion in infrastructure and other stimulus spending to keep its own economy humming amid the global crisis.
Many economists are concerned about U.S. reliance on China for funding. By buying Treasury bonds, which are denominated in dollars, China is able to keep the dollar strong compared with the yuan. As a result, Chinese exports are cheaper relative to U.S. exports. That’s why many economists are worried about the long-term effect of the United States’ and China’s financial relationship.
As an immigrant who came to this country in search of a better life, I can emphatize with those people who are here illegally during those times of prosperity. Those were the good old days when the United States was the richest nation and the largest creditor in the planet. Like myself, those immigrants also yearn for that American dream of having a good job and owning a home with a backyard. During those prosperous times, I am happy for those truly-deserving people who can avail themselves of our liberal welfare system. I don’t feel that way anymore. This great country that was once the richest and the largest creditor on the face of the earth is now the largest debtor nation in the world although it still retains its bragging rights as the most powerful country in terms of its military capabilities. But this country can no longer afford to be a welfare state without mortgaging the future of our children’s children. I want those Obama and his Democratic Party supporters to hear me out: “Please use your sense of justice and fairness and try to understand that Republicans are only trying to save this great country from financial ruin due to Democrats’ reckless spending of money that we do not have in order to fund those unaffordable programs that they espoused! We simply just can no longer afford them. Am I making myself clear here?”
If you try to look at it from a different perspective, the United States, in reality, is now owned largely by China and other countries who are holders of U.S. Debts. I don’t know about you, but in the event that China forecloses on the United States, I’ve made the decision to leave the country for good. I don’t plan on being a Chinese citizen. I’d rather be a Democrat.