The Skeptical Optimist on foreigners holding our debt
October 02, 2006
If you're someone who's been losing sleep worrying about the foreigners holding our debt, you really should read The Skeptical Optimist. Mr. Optimist presents a lot of reassuring data and argument.
In his most recent--as I write this--post on the topic, he reports Treasury data on the foreign buyers of U.S. debt during the period July '05 to July '06. Who bought the most? Japan? China? The OPEC countries?
No. First, by a considerable amount, was Great Britain! And the data show that China's increase in holdings was almost offset by a decrease in Japan's. (At the current rate of increase, it will take about eight years for China to own as much as Japan does today.)
Mr. Optimist remarks tartly:
Many people seem to be convinced that foreigners are about to spring a trap on us. According to the fear-peddlers’ innuendo, we’re supposed to be preparing for foreign T-bond owners—especially the Chinese—to conspiratorially dump all their holdings at once, sending everyone (including themselves) into the poorhouse. (Sounds a lot like the global-finance version of a suicide bomber, doesn't it?)
Personally, a lot of other things worry me more.