In 1945, foreigners owned just 1% of U.S. Treasurys; today they own a record high 46%.
From The Wall Street Journal:
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
A key concern will be whether the appetite for U.S. debt might change among foreign investors, in particular China, the world's largest foreign holder of U.S. Treasurys. In 1945, foreigners owned just 1% of U.S. Treasurys; today they own a record high 46%, according to research done by Bank of America Merrill Lynch.
The full faith and credit of the U.S. was established by Alexander Hamilton's 1790 push to have the fledgling federal government assume and pay back debts that states incurred during the Revolutionary War. It has gone largely unquestioned since, with just the occasional hiccup, including a 1979 debt-ceiling argument that delayed a few payments.
Recent demographic and economic changes, in particular the aging population and ballooning health-care costs, have made the long-term U.S. picture an ugly one, a problem exacerbated by a deep recession, which cut tax receipts and prompted a flood of fresh debt-financed spending.
Forging an agreement to tackle these problems has been elusive, with bitter partisan disagreements about tax policy and entitlement programs such as Medicare taking center stage.
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
A key concern will be whether the appetite for U.S. debt might change among foreign investors, in particular China, the world's largest foreign holder of U.S. Treasurys. In 1945, foreigners owned just 1% of U.S. Treasurys; today they own a record high 46%, according to research done by Bank of America Merrill Lynch.
The full faith and credit of the U.S. was established by Alexander Hamilton's 1790 push to have the fledgling federal government assume and pay back debts that states incurred during the Revolutionary War. It has gone largely unquestioned since, with just the occasional hiccup, including a 1979 debt-ceiling argument that delayed a few payments.
Recent demographic and economic changes, in particular the aging population and ballooning health-care costs, have made the long-term U.S. picture an ugly one, a problem exacerbated by a deep recession, which cut tax receipts and prompted a flood of fresh debt-financed spending.
Forging an agreement to tackle these problems has been elusive, with bitter partisan disagreements about tax policy and entitlement programs such as Medicare taking center stage.
posted by Sid Cottingham | 1:07 AM
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