America is steadily being purchased by foreign interests. For years, the U.S. government has sold treasury bonds to anyone willing to buy them to fund our country's budget deficits. There is mounting evidence that foreign interests are now switching some of their funds to private American securities - stocks and bonds issued by private companies. These trends coincide nicely with the desertion of the act of saving on the part of Americans. Our government is selling out, and we're selling out right along with it.
Following are the top ten holders of United States Treasury bonds, as of summer 2007:
1. Japan, with around $600 billion.
2. China, with around $400 billion.
3. U.K., with around $250 billion.
4. Oil exporting countries, which collectively held around $125 billion.
5. Brazil, with around $100 billion.
6. Caribbean countries, which collectively held around $75 billion.
7. Luxembourg, with around $65 billion.
8. Hong Kong, with around $55 billion.
9. Taiwan, with around $50 billion.
10.Korea, with around $50 billion.
Every month of every year, our debt to other countries increases. However, one interesting trend is that the percentage increase from month-to-month has declined. It seems that this slack in the consumption of bonds is being accounted for by an increasing rate of foreign investment in private securities. It seems that other countries may be tiring of holding onto bonds and dipping further into our economy to reap the better returns provided by private securities.
The foreign interests who have been buying American bonds are unlikely to drop them altogether. If the holders of American bonds all decided to sell, the market for the bonds would be flooded, which would raise yields and drop the price of the bonds. The U.S. would have to pay higher interest to keep selling bonds, which would not be good for the American people, and the other countries would lose considerable investment worth as the value of the bonds declined.
As alluded to earlier, one reason for the large amount of bonds that are sold to other countries is that there just aren't enough Americans who are savers or safe investors to buy the bonds. In 2005 and 2006, the U.S. was in negative savings mode, as its citizens spent more than they made. This has resulted in our dependence on foreign money to keep our country running.
In 2007, the U.S. comptroller general, David Walker, said that the huge holdings of American bonds by foreign countries was a powerful weapon in the hands of countries that may be hostile to our interests. If an enemy of America wanted to do serious damage to our economy, at its own expense as well as ours, it could sell of its bonds on the open market, dragging bond prices down. Our government would be forced to pay higher rates on its bonds, which would spill over into the rest of our economy. It would become more expensive for consumers and businesses to borrow money.
With foreign interests buying up ever more of our economy, both in the form of debt issued by our government as well as securities issued by private companies, the U.S. has put itself in a perilous position. Our enemies now have a tool to do us great harm, no bombs or airline hijackings required. It is not too late to reverse this trend and become solvent again, but it starts at home. It is up to every American to work hard, save, invest, and build a future on solid ground, not one paid for by foreign interests.
