"Who Will Buy the Flood of U.S. Treasuries?"
March 16, 2009
"This is probably the most common question clients and market contacts have been asking," wrote Brown Brothers Harriman two weeks ago.
The size of the US budget deficit is mind boggling. There is great concern that the supply will overwhelm demand. The US government is expected to sell a record of $2.5 trillion of paper this year, according to some estimates.
It seems a particularly important question to ask, given Friday's report of what the Chinese Premier stated.
One blogger at Seeking Alpha is not optimistic:
As China throttles way back on its purchase of US debt, America will have three choices - 1. Borrow and spend less 2. Raise taxes tremendously or 3. Print money. Based on what we have seen so far, it will be some of number 2 and a lot of number 3.