[Marxism] China's holdings of US Debt
sartesian at earthlink.net
Tue Mar 3 14:27:19 MST 2009
>From today's Financial Times, critical point made 2/3 of the way through the
article called :
Haven Status Adds to Dollar Attraction
....The ability of central banks in Brazil, Russia, India, China and Saudi
Arabia, which over the past few years have accounted for at least 30 per
cent of net Treasury buying to finance the ballooning US budget deficit is
limited by the fact that their currency reserves are either falling--as in
Brazil and Russia--or no longer rsing, as in China.
The article goes on to raise another interesting point:
Aside from the actions of global reserve managers, analysts point to
activity from US mutual funds, which have shown an unwillingness to increase
their allocations to foreign markets.
Analysts saythat matters because US fund managers hold $30,000 billion of
domestic and foreign securities, compared with the estimated $7000 billion
of foreign currency reserves managed by the world's central banks.
Having increased their share of overseas assets from about 12.5 percent at
the start of the decade to a high of 26 per cent last summer, increasingly
risk averse US funds have reduced that shared to 23 per cent, where it has
remained so far this year.
Mansoor Mohi-uddin at UBS says further reductions in the proportion of their
portfolios held in overseas markets and the subsequent repatriation of
capital will help the US to continue to fund its current acount deficit and
thus support the dollar this year...
That last bit is speculation, pure and simple, but the rest gives us an
indication I think that declining purchases of US debt instruments by
foreign central bankers will not be an index to the "dethroning" of the
dollar, but rather to those countries own weaknesses and dependencies on
dollar trade and investment; and that repatriation of capital to the US,
while rife with tax conseqences for the US entities, has dire consequences,
and greater potential impact than the actions of central bankers. The only
thing the bourgeoisie hate more than paying taxes, is not not being able to
get their money back behind the gates of their gated communities when the
fires from their game of financial arson gets out of control.
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