Sunday, July 31, 2011

Will China Dump U.S. Debt?


As the U.S. teeters closer to the brink of debt default, the political stalemate is being watched closely by its biggest foreign creditor, China. At last count, Beijing owned almost $1.2 trillion of U.S. Treasury debt.

By Bob DeMarco
All American Investor

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"If you owe the bank a million dollars, the bank owns you. If you owe the bank a billion dollars, you own the bank. Right now, the problem that China's in is that it's owed probably around $2 trillion ... Even though supposedly they're the creditor, they're actually in the weaker position, because they're not a creditor by choice, and they're not a creditor in their own currency. They're a creditor in someone else's currency, and that puts them in a very vulnerable position," Chovanec says.

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Original content Bob DeMarco, All American Investor