While the US economy is in a growth recession and economic growth is anemic at best,
Terrence Jeffrey of CNS News reports that China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills
China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.
Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.
Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.
Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.
Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.
Uncoverage asks,
all of this discussion [on raising the debt ceiling] is now moot, because if no one wants to buy your debt, why bother to raise the debt limit?
Doug Ross posts,
It turns out that 150 prominent economists back the GOP on the debt ceiling fight.
More than 150 economists back U.S. House of Representatives Speaker John Boehner’s call to match any increase in the debt limit with spending cuts of equal size, according to a letter released by the Republican leader’s office Wednesday… Signatories include Nobel laureate Robert Mundell of Columbia University and economists from schools like New York University and Georgetown University, as well as conservative think tanks like the American Enterprise Institute… Republicans say they will not back any increase that does not include steep spending cuts and other limits to ensure that debt stays at a manageable level.
Meanwhile, after QE1 & QE2 have fueled inflation, the current anti-business environment of higher taxes and higher regulation is doing nothing to pull the economy out of the doldrums.
UPDATE, Monday 6 June,
Reader Clark comments,
Hello Fausta,
I love your blog and read it often.
Perhaps you would wish to know that this story is more or less nonsense.
China sold short-term US debt instruments ( which pay almost nothing in interest ) and bought longer-term US debt instruments ( which pay slightly more than nothing). Moreover all this took place many months ago.
http://www.zerohedge.com/article/china-dumps-us-bonds-attempts-clickbaiting
I stand corrected on the bonds story.
