Friday, February 17, 2012

Largest Worldwide Holders Of U.S. Debt - The "Ponzi Pivot"

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While a formal bankruptcy proceeding, a liquidation sale, or a mandated shutdown of the operations in the U.S. is unlikely -- it would be complicated to sell off our hyperleveraged assets, our institutions, and our store of natural resources in a real-world, real-time scenario, the U.S. is a debtor nation -- meaning that the sovereign republic owes more to its citizens (social security, disability, refunds, legally-mandated payments, and a whole boatload of yet-to-be-determined debt -- unbooked, but colossal -- relating to monetary expansion and bailouts at the taxpayers' expense), and to foreign interests than it could ever hope to pay.

The U.S. government indebtedness far outweighs its assets, both existing and receivable. The country has survived, and continues to remain afloat by issuing massive amounts of interest-bearing debt (most of which has been purchased by foreign government-sponsored or state-owned financial institutions outside of the U.S.), and by printing money ('scrip'), none of which is supported by anything more solid than confidence in the U.S's economic recovery. Both the amount of principal and interest on U.S. debt is growing astronomically. We are not illiquid (we print money and sell debt instruments), but we are certainly insolvent if we were to be viewed as any normal business.

When we were a net producing and exporting nation, we were a creditor nation -- the U.S. was solvent, and many nations owed us large sums of money. Since the late 1970's this situation has reversed itself in the extreme.

This is not just a U.S. crisis, but it is a massive collection and credit crisis for all these international holders of dollar-denominated debt. If the US Dollar plummets, the values of the holdings of many a country and its central banking system will plummet.

Because they cannot easily seize U.S. assets and liquidate them in order to recover on their debts, creditor nations are hoping and praying that the U.S can re-energize its economy to increase the perceived value of their holding of U.S. bonds and currency. Ironically, our creditor nations, many of whom do not agree with us politically, ethically, socially [some of them are quite hostile to the U.S. and its interests on other fronts in the 'world domination game'] are forced into the position of keeping the value of the U.S. Dollar strong because they are so heavily invested in it.

We have so many international creditors, with such giant holdings of US financial instruments, that they are actually working hard at supporting the U.S.' rather evident Ponzi Scheme on hopes that all of our wasted money will somehow (over some inestimable period of time) be made up through a recovery and the ensuing productivity and profitability.

In my mind, this is a bit like a casino bettor who has lost all of his money at the blackjack table, and manages to borrow some more money from the local loan sharks (all of whom he has borrowed before) on the probably unlikely chance that he'll hit a 'winning streak' and recover. And then, he'll pay back all of his debts with interest and avoid future threats to his life and the well-being of his family. We, noble readers of The Internationalist Page Blog all know how unlikely this actually is. We also know that the Treasury and reserve banks as holders of currency of debt do not represent the U.S. which is comprised of its people -- Consider the U.S. Treasury, Federal Reserve Banks, and the rest of the governmental holders as if they were wither A) a foreign entity, or B) bluffing at poker with a very, very poor hand.

At present, the international holders of U.S. debt, are, from largest in amount (i.e., biggest creditor) to smallest in amount of holdings:











Click on the link below to read a Yahoo! News story about this subject in its entirety, and then click on the "BACK" button on your browser so we call reach some conclusions and a consensus: [Don't worry, we'll run some errands while you're gone....perhaps make a quick call to mom...]

How does the U.S. compensate for this dangerous disparity with its hostile creditors? It continues to outsource employment an vendor opportunities to them, as it increases its imports of their exports. The part that's most laughable is the Devil's Bargain in this arrangement -- we are giving our creditors, especially the Asian ones, payment in U.S. Dollars.

The U.S. is truly at the very epicenter the world's economic crisis.

As I've mentioned before: You cannot borrow your way out of debt.

Douglas E. Castle

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