Fears Rise That Japan Could Sell Off U.S. Debt

[Purveyor]

Some lawmakers and market analysts are expressing rising concerns that a demand for capital by earthquake-ravaged Japan could lead it to sell off some of its huge holdings of U.S.-issued debt, leaving the federal government in an even tighter financial pinch.

Others say a major debt sell-off by Tokyo is unlikely, but noted that the mere fact that questions are being raised speaks volumes about the risks involved in relying so heavily on foreign investors to fund U.S. debt.

“This natural disaster in Japan concerns me that it could speed up what’s coming, because they are the second leading buyer of our debt,” Sen. Rand Paul, Kentucky Republican, told The Washington Times. “Small degrees of differences in how much they buy of our debt, I think, can make a big difference in interest rates that we have to pay people to buy our debt.”

With the federal government having piled up $14.2 trillion in debt, budget experts are warning that the country is on an unsustainable fiscal path. Congress, they say, must find cuts in all areas of the budget, while reforming the entitlement programs — Social Security, Medicare and Medicaid — that are the biggest drivers of national spending.

MORE...

http://www.washingtontimes.com/news/2011/mar/24/fears-rise-that-japan-could-sell-off-us-debt/

[Mnemosyne]

1. Maybe there should have been regulations to prevent such large

holding of our debt by other countries.

And some Wall street regulations wouldn't have hurt either. :rofl:

[former9thward]

15. Who would have bought the debt then?

[Mnemosyne]

21. Just saying that foreign owners of US debt should have been limited

to a under certain percentage to prevent another country from using said debt against us. :)

[former9thward]

22. I know what you are saying.

But that means someone else would have had to buy the debt in order to keep the country running. Who would it be? No one is stopping Americans from buying U.S. treasury debt. So when they don't who would take the place of Japan or China?

[Mnemosyne]

24. I have no answers, former9thward. I only know that we are in

deep shit with no end in sight. :hi:

[damntexdem]

2. I warn that the country is on an unsustainable fiscal path. Congress ...

must find tax hikes on its rich in order to fund all areas of the budget while servicing its debt.

[girl gone mad]

5. If the wealthy really understood economics..

they would be begging for tax hikes right now.

Of course, most can only think in terms of preserving their individual wealth at the expense of others.

[DJ13]

3. Selling the debt doesnt have to mean "back to the US government"

Like most investments it usually means it will be sold to another third party entity at a slight loss.

[Night Crawler]

4. However if they flood the market with discounted debt

it make it more expensive to issue new or refinance current, maybe even impossible.

[unblock]

6. the "the market knows best" people refuse to look at the market when it doesn't suit them

if the market actually thought the federal government was at risk of not repaying its debts, or if the japanese were about to flood the market with treasuries, then the price would plummet and the interest rate would skyrocket.

but that hasn't happened. the market isn't worried. if the u.s. were paying 10% interest on its debt, that would be a huge problem, but it's not. the market isn't demanding a big premium for u.s. debt, and isn't worried about the japanese or any other investor flooding the market with sell orders.

but like most republicans, rand and the washington times only care about what the market says when they like what it's saying.

[mahina]

7. Hey, Washington Times with a leading quote by Rand Paul...

but what does Michelle Bachman think?

[Purveyor]

8. As a rule, I don't post articles from the WTimes but in my haste, I really thought this was a WPost

article.

My bad.

[Champion Jack]

9. please no more bullshit from the Moonie times

[TomClash]

10. 30 years of tax cuts . . .

. . . and military spending . . . :puke:

[David__77]

11. Maybe that will help rein in US war adventures abroad.

Whatever reins it in, I'm thankful for.

[bluedigger]

12. Does this mean Obama will get calls at home and work?

"When can we expect payment?"

:rofl:

[Politicalboi]

13. Wouldn't blame them

After all the nasty "Pearl Harbor" paybacks made me sick too.

[jtuck004]

14. If they try to sell too fast it will drop the value of their holdings. This is

just silly talk. Yes, in theory, a large, really large, sale could drop the value. But there would be no way to keep the value of what they are selling and holding above the carnage. So what would be the motivation? They might, little by little, sell it to others, but holders of such debt buy and sell it all the time.

We have been hearing this stuff for years, and shouldn't forget all those who were wrong when the book comes out celebrating the first few who were lucky enough to say it at the right time.

[pmorlan1]

16. I'm not buying it

It looks like another excuse to go after Social Security, Medicare and Medicaid.

[plumbob]

18. Precisely and thank you for a nice clear explanation.

These fuckers will stop at nothing.

[certainot]

20. wash times writers sit in koch funded think tanks, wet dreaming of privatizing everything

and keep gold-bound hardcover volumes of ayn randian fantasies under their silk pillows.

[Lucky Luciano]

17. Rubbish. nt

[lafayettelonewolf]

19. Excuse me Washington Times...

Last time I checked, Social Security, Medicare and Medicaid aren't entitlements nor they are the biggest drivers of national spending. Apparently, you're just spinning words from the Capitalist-Military-Industrial-Wall Street Complex. In case you guys don't remember, you and I pay into Social Security AND Medicaid/Medicare through our paychecks. Hell, I've been working at jobs for the last, say, 17 years guys? So with that Washington Times, take your shock doctrine capitalism somewhere else. Good night and good luck, sunshine. Because you're going to need it.

[tama]

23. LEAP2020 says same:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x86572