Who owns US? The top 10 creditor hostaged by US

Discussion in 'International Politics' started by kickok1975, Mar 1, 2011.

  1. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Regardless of how much closer Obama's budget brings our economy into a balance of payments not seen since 2001, we will continue to run deficits for the next decade, and the national debt will keep growing every year that happens.

    While most of the country's $14 trillion debt is held by private banks in the U.S., the Treasury Department and the Federal Reserve Board estimate that, as of December, about $4.4 trillion of it was held by foreign governments that purchase our treasury securities much as an investor buys shares in a company and comes to own his or her little chunk of the organization.
    Looking at the list of our top international creditors, a few overall characteristics show some interesting trends: Three of the top 10 spots are held by China and its constituent parts, and while two of our biggest creditors are fellow English-speaking democracies, a considerable share of our debt is held by oil exporters that tend to be decidedly less friendly in other areas of international relations.
    Here we break down the top 10 foreign holders of U.S. debt, comparing each creditor's holdings with the equivalent chunk of the United States they "own," represented by the latest (2009) state gross domestic product data released by the U.S. Bureau of Economic Analysis. Obviously, these creditors won't actually take states from us as payment on our debts, but it's fun to imagine what states and national monuments they could assert a claim to.


    1. Mainland China

    Amount of U.S. debt: $891.6 billion
    Share of total foreign debt: 20.4%
    Building on the holdings of its associated territories, China is undisputedly the largest holder of U.S. foreign debt in the world. Accounting for 20.4% of the total, mainland China's $891.6 billion in U.S. treasury securities is almost equal to the combined 2009 GDP of Illinois ($630.4 billion) and Indiana ($262.6 billion) in 2009, a shade higher at a combined $893 billion. As President Obama -- who is from Chicago -- wrangles over his proposed budget with Congress he may be wise to remember that his home city may be at stake in the deal.

    2. Japan

    Amount of U.S. debt: $883.6 billion
    Share of total foreign debt: 20.2%
    The runner-up on the list of our most significant international creditors goes to Japan, which accounts for over a fifth of our foreign debt holdings with $883.6 billion in U.S. treasury securities. That astronomical number is just shy of the combined GDP of a significant chunk of the lower 48: Minnesota ($260.7 billion), Wisconsin ($244.4 billion), Iowa ($142.3 billion) and Missouri ($239.8 billion) produced a combined output of $887.2 billion in 2009.

    3. United Kingdom

    Amount of U.S. debt: $541.3 billion
    Share of total foreign debt: 12.4%
    At number three on the list is perhaps our closest ally on the world stage, the United Kingdom (which includes the British provinces of England, Scotland, Wales and Northern Ireland, as well as the Channel Islands and the Isle of Man). The U.K. holds $541.3 billion in U.S. foreign debt, which is 12.4% of our total external debt. That amount is equivalent to the combined GDP of two East Coast manufacturing hubs, Delaware ($60.6 billion) and New Jersey ($483 billion) -- which was named, yes, after the island of Jersey in the English Channel. The two states' combined output in 2009 came to $543.6 billion.

    4. Oil Exporters

    Amount of U.S. debt: $218 billion
    Share of total foreign debt: 5%
    Another grouped entry, the oil exporters form another international bloc with money to burn. The group includes 15 countries as diverse as the regions they represent: Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria. As a group they hold 5% of all American foreign debt, with a combined $218 billion of U.S. treasury securities in their own treasuries. That's roughly equivalent to the combined 2009 GDP of Nebraska ($86.4 billion) and Kansas ($124.9 billion), which seems to be an equal trade: The two states produce a bunch of grain for export, which many of the arid oil producers tend to trade for oil.



    5. Brazil

    Amount of U.S. debt: $180.8 billion
    Share of total foreign debt: 4.1%
    Rounding out the top five is the largest economy in South America, Brazil. The country known for its beaches, Carnaval and the unbridled hedonism that goes along with both has made a big investment in the U.S., buying up $180.8 billion in American debt up to December. That's almost equal to the $180.5 billion combined GDP of Idaho ($54 billion) and Nevada ($126.5 billion), a state that is no stranger to hedonism itself.


    6. Caribbean Banking Centers

    Amount of U.S. debt: $155.6 billion
    Share of total foreign debt: 3.6%
    You have to have cash on hand to buy up U.S. government debt, and offshore banking has given six countries the combined capital needed to make the Caribbean Banking Centers our sixth-largest foreign creditor. The Treasury Department counts the Bahamas, Bermuda, the Cayman Islands, the Netherlands Antilles, Panama and the British Virgin Islands in this designation, which as a group holds $155.6 billion in U.S. treasury securities. That's equivalent to the GDP of landlocked Kentucky ($156.6 billion), whose residents may not actually mind if they were ever to become an extension of some Caribbean island paradise.


    7. Hong Kong


    Amount of U.S. debt: $138.2 billion
    Share of total foreign debt: 3.2%
    At No. 7 on the list of our foreign creditors is Hong Kong, a formerly British part of China that maintains a separate government and economic ties than the communist mainland. With $138.2 billion in U.S. treasury securities, the capitalist enclave could lay claim to Yellowstone Park and our nation's capital: The combined GDP of Wyoming ($37.5 billion) and Washington D.C. ($99.1 billion) totaled $136.6 billion in 2009.


    8. Canada

    Amount of U.S. debt: $134.6 billion
    Share of total foreign debt: 3.1%
    They say that a friend in need is a friend indeed, and our neighbor to the north has proven to be a kind and generous creditor in our time of financial need. Canada holds about 3.1% of our foreign debt, or $134.6 billion. If friend were to become enemy and Canada were looking to annex some U.S. land to cover the debt though, the country would have an easy time of it. The combined GDP of Maine ($51.3 billion), New Hampshire ($59.4 billion) and Vermont ($25.4 billion) comes close to Canada's debt holdings at $136.1 billion.
    Residents of the three states in our extreme northeast corner should start practicing their French: They might become Québécois one of these days.


    9. Taiwan

    Amount of U.S. debt: $131.9 billion
    Share of total foreign debt: 3.0%
    Taiwan, an island barely 100 miles off the coast of China, is claimed by the People's Republic of China, despite having its own government and economic relations with the outside world. Part of those economic relations includes the island's holding of $131.9 billion of U.S. debt, roughly equivalent to the combined GDP of West Virginia ($63.3 billion) and Hawaii ($66.4 billion), which totals $129.7 billion.
    Unless we get our spending in check, we risk losing some of our most visually stunning territory (West Virginia, obviously) to our friendly neighbors on the other side of the Pacific Ocean.


    10. Russia

    Amount of U.S. debt: $106.2 billion
    Share of total foreign debt: 2.4%
    Starting off the list of our major foreign creditors is Russia, which holds about 2.4% of the U.S. debt pie that sits on the international dinner table. Its $106.2 billion in treasury securities is equivalent to the 2009 GDP of our sparsely populated North: The combined output of North Dakota ($31.9 billion), South Dakota ($38.3 billion) and Montana ($36 billion) matches up nicely with the Russian holdings, at $106.2 billion.
    Let's hope Russian president Dmitry Medvedev doesn't come to collect.
     
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  3. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    When you own Bank 10,000 dollars, it's your problem. When you own bank 1 trillion dollars, it's banks problem. Looks like many countries are willingly or unwillingly becoming hostage of US government which relentlessly spend and borrow money. Is there a way out?
     
  4. pmaitra

    pmaitra Moderator Moderator

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    Great thread kickok1975.

    Hmmm, looks like PRC has been playing its card well in the past few decades. The recent housing market collapse has been a golden opportunity for PRC.

    The only way the US can get out of this quagmire is by printing lot and lots of Dollar Bills, just like what Germany did.

    In the process, of course, Euro will take its place.
     
  5. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    PRC didn't gain much by lending to America, at least financially. In fact, they are set to lose hundreds of billions hard earned money by investing in Fannie Mae and Freddie Mac debt because US government is at edge to dispose these two giant agencies.

    The US Federal Reserve is printing money like crazy. The whole world is paying the price for US financial crisis by investing in US treasure, bond and only God knows when can they get their money back.

    No one can foreclosure US if she can’t pay back. No one has courage to attack her if she refuse to honor debt. What else can you do?
     
    Last edited: Mar 1, 2011
  6. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Looks like India is pretty smart not invest in US. One report says Indian living in US remit more than 51 billion back to India each year, the world most.
     
  7. Yusuf

    Yusuf GUARDIAN Administrator

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    Good to see india not in the list. There is more possibility of black money from swiss bank to come back than the money from US
     
  8. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Those money must be from corrupted officials overseas account. We also have Swiss account. We just don't know or maybe never know.

    However, Indian is among the highest income earner group here in US. The average hosehold income of Indian family is almost 50% higher than Whites and almost double that of Black and Latinos.
     
    Last edited: Mar 1, 2011
  9. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    kickok does China have plans to diversify out of debt and into real assets?? Currently the yield on US treasuries is 1% while Chinese stock market is growing at 10%, it seems like the Chinese are losing 9% returns annually by keeping the status quo?
     
  10. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    india has bought US government debts worth around/over 50b usd, though india was always under pressure to buy more and US "lobbyists" within the government always supported india buying more of these debts but the rbi resisted the move and so the government had to back out. india's yearly remittance exceeded 55b usd in 2010 from across the globe.
     
  11. mattster

    mattster Respected Member Senior Member

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    Kickok, Do you know why China bought so much of that subprime loans - Fannie Mae and Freddie Mac. ??

    China major exports to the US are all consumer electronics, household appliances, furniture, wood products, building-materials, textiles, plastics, and small-scale industrial products. Now look closely at that list, and do you see how closely that list is tied to the housing market. All your exports to US are generally below USD $2000 dollars. There is not a single chinese automobile on US roads today.

    Nothing spurs consumption in new household consumer electronics and all the other items listed above as new home building and ownership.
    The reason China so desperately wanted to keep easy credit available for home ownership purchase in US is because it was directly tied to consumption of products that you guys make. Maybe you dont need the US consumer anymore, but you needed it 10 years ago.

    This was not a one-way street !!
     
    Last edited: Mar 1, 2011
  12. Adux

    Adux Senior Member Senior Member

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    You are aware that those "I owe you" Treasury Bonds means diddly sqwat! It is not China which has US by the balls, but the other way around. It is just a piece of paper.
     
  13. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Foreign reserve is different from domestic money. You can't use dollars to invest in domestic stock. You have to use it outside the country.

    Besides, I don't think government can invest in Stock.
     
    Last edited: Mar 1, 2011
  14. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    It's just one reason. When China is sitting on the huge pile of foreign reserve, she needs find a way to make money. US government bonds and treasure are by far most stable and available government debt. Since China has close to 3 trillion reserve, only US debt can consume so much money. No other country in the world has such big debt offering.

    China just doesn't have choice. However, China now are diversifing it and spend more money purchasing natural resources and foreign compaines.
     
  15. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    You are right just half way. It's not easy for US to default its debt. Capitalism is built upon credit and no matter how strong you are, you have to play market rule. US default on Chinese debt will cause China lose all the money, but would also bankrupt confidence internally and externally of US. It's a double edge knife.
     
  16. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    India people are as thrifty as Chinese. They started poor but end rich. There are numerous success story happening in US every day.
     
  17. Daredevil

    Daredevil On Vacation! Administrator

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    There is no immediate way out for China from this. Any sudden dumping of treasury bonds will also tank the value of dollar and thus the value of the paper that China holds. It can only get out of this quagmire very gradually in a calibrated manner by purchasing offshore resources and companies that can help China in maintaining its growth.
     
  18. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Banks can still invest in the domestic stock market but if they are being paid in a debt instrument they have no liquid assets to invest just an IOU, with the hope of redeeming it one day. This payment in debt and not in real dollars is a dilemma for the government for 2 reasons 1. the amount of debt they have accumulated being #1. 2. who will buy this debt?? No one else in the world wants it and there is no market outside of US govt for this amount. There is a saying if you owe the bank 100,000$ the bank owns you ,but if you owe the bank 100 million dollars you own the bank.
     
  19. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Agree, China figured it out and invested billions on these areas. India is doing the same thing now also.
     
  20. kickok1975

    kickok1975 Stars and Ambassadors Stars and Ambassadors

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    Agree, China's inflation is already high. China can't covert these dollars into RMB which will further worsen the inflation.
     
  21. Daredevil

    Daredevil On Vacation! Administrator

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    But there is only one problem. The returns on such treasury bonds ($800 billion) is very very less as opposed to if China were to invest the same money on some other stuff.
     

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