Saturday, May 2, 2009
Mayday! for the US
China has 'canceled US credit card'
The Raw Story: China, wary of the troubled US economy, has already 'canceled America's credit card' by cutting down purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed to be mostly in dollars, along with about 800 billion dollars in US Treasury bonds, more than any other country. But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.
Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had 'very legitimate' concerns about its investments. 'It would appear, quietly and with deference and politeness, that China has canceled America's credit card,' Kirk told the Committee of 100, a Chinese-American group. 'I'm not sure too many people on Capitol Hill realize that this is now happening.'...
Kirk said he was the the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors. 'There will come a time where the lack of Chinese participation may have a significant impact,' Kirk said. 'We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone.'
Image source here.