China's Move To Keep More Money At Home May Hurt US Borrowers.
The New York Times (1/7, A1, Bradsher) reports in a front page story, "China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers." In the last five years, China has "spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. ... But now Beijing is seeking to pay for its own $600 billion stimulus -- just as tax revenue is falling sharply as the Chinese economy slows." One "danger is that investors will demand higher returns for holding Treasury securities, which will put pressure on the United States government to increase the interest rates those securities pay. As those interest rates increase, they will put pressure on the interest rates that other borrowers pay."
Posts
