U.S. Debt

BREAKING: U.S. Debt to China Will Destroy the U.S. Dollar

US Debt

The amount of U.S. debt owned by foreign nations has never been higher.

Since Sept. 30, 2014, the U.S. Treasury has accumulated $17.8 trillion worth of debt. That’s roughly 103% of the total U.S. GDP in 2014.

And 34% of that debt – $6.1 trillion – is owned by foreign governments. Here’s why that’s such a big problem…

How U.S. Debt to China Threatens the Dollar

nasdaq earnings calendar

The U.S. owes foreign governments more money than it ever has - since 2001, the amount has increased six fold to $6.18 trillion.

And U.S. debt to China has been the biggest of all U.S. foreign debt, for seven years running.

This means nations like China hold the power to drastically affect the American economy...

China's Yuan Enters the Currency "Big Leagues" to Take on the Dollar

China's yuan

I've been following one of the biggest "stealth" stories of the year: the rise of China's yuan as it gears up to take its place on the world stage.

Towards this very goal, China has taken steady, calculated steps for some time.

It's also no secret that China and Russia have a "special relationship" that will drive this trend.

China is likely to help its neighbor in this time of need, and the longer-term global implications could well be dramatic...

Don't Fear China and Japan Owning More U.S. Debt

Alibaba buys Yahoo

The U.S. Treasury Department said today (Thursday) that total foreign holdings of U.S. debt rose 1.1% in November to $5.72 trillion, putting foreign holdings 0.1% below the all-time high of $5.76 trillion it reached in March 2013.

In particular, China's holdings reached record levels, increasing 0.9% to $1.32 billion, and so did Japan, which boosted its holdings by 1% to $1.19 trillion. The two countries are the largest and second-largest foreign buyers of Treasury debt, respectively.

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Will United States Debt Holders Bail on Treasuries?

afraid looking businessman

Since the mid-1990s, China and a host of other foreign governments have quietly acquired one-third of all United States public debt. Foreign holders of United States debt held more than $5.6 trillion in Treasury securities as of August 2013.

But continued debt-ceiling drama in the United States is starting to change that.

Read More…

Four Things the Debt Ceiling Deal Doesn't Fix

Time Bomb

Everyone in the Capitol is patting themselves on the back and glad-handing for the news media, rattling on about “fighting the good fight.” Sure, we’ve avoided default… for just 112 more days. Most of us won’t even pay four phone bills by the time the “crisis” gets brewing again. As ridiculous as that fact is, it gets worse. You see, the “Great Band-Aid Treaty” doesn’t actually do anything to address the fundamental challenges facing our economy right now.

Here are the four biggest issues that Congress ducked out on...

Should We Be Worried About a U.S. Debt Default?

Why You Have to Be Investing in the Stock Market Now

While the stock markets so far have reacted mildly to the government shutdown, the looming Washington fight over the need to raise the federal debt ceiling could lead to a U.S. debt default.

And that, everyone agrees, would trigger a much more pronounced reaction from Wall Street.

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Dire Consequences Await as U.S. Debt Nears a Tipping Point

Fiscal cliff stack of quarters left

As U.S. debt as a percentage of GDP hovers at levels not seen since World War II, concerns are growing that the American economy is susceptible to a debt crisis in the near future.

Here's why people are worried: If interest rates return to normal levels of around 5% as the U.S debt approaches $20 trillion, then servicing that debt each year will cost taxpayers $1 trillion.

Does anyone think that the Federal Reserve, as the enabler of all this debt, will be in any rush to raise interest rates?

Following Europe's example, the U.S. debt-to-GDP ratio hit 105.6% in 2013, a perilous level that has long-term repercussions for the world's largest economy, according to Standard & Poor's. By 2016, right around the time that Hillary Clinton will be running in earnest to be president, the ratio will likely hit a staggering 111%.

But how much debt is too much debt? And what are the pitfalls facing the United States in the future? Both questions remain hotly contested among economists, despite a wide acceptance of a "tipping point" theory both by politicians and ordinary Americans.

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DON’T BE SO ARROGANT, MR. PRESIDENT

Empires have come and gone. Some lasted a blink of an eye and some millennia.
The question is, after 9/11, the rise of China and a great financial crisis, where does the U.S. empire stack up to its predecessors?
Well, it seems the one commonality they all have is the point when their might was undermined by sloth and greed. And entitlements: free bread and circuses. For some it took years, others centuries.
Here, in a compelling and unique address, is what Romulus Augustus, the last emperor of the Roman Empire, might say to President Obama now about how to keep America great.
Read on and share with family and friends...

The Latest Obama Outrage: the Family's $100 Million Vacation

Flip flops Q

How much do you spend on your summer vacation? American households usually spend about $1,200 per person on summer vacations, according to a recent American Express survey.

Presidents spend more on their vacations than you or I. They have to. Air Force One and security does cost more than loading the Honda and heading to the beach.

Here's how much some recent presidents spent our tax dollars on vacation.

Ronald Reagan spent most of his free time at his California ranch. Taxpayers covered the cost of approximately $8 million for presidential travel during Reagan's first six years in office, according to the Los Angeles Times. That amounts to $1.3 million a year.

For George Bush the cost of flying Air Force One to his Texas ranch was approximately $56,800 per trip, for each of the 180 trips according to Media Matters. President Bush spent Christmas during his two terms at the White House so his staff and secret service could spend the holiday with their family, according to Conservative Byte.

Now Obama plans to blow away all previous presidents' leisure travel costs on our dime with a better than Disney World extravaganza trip to Africa.

However Obama had to cancel the safari because of the need to fill the surrounding jungle with snipers to guard the president from wild animals!

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U.S. Economy to Get Jolt from 1.2 Million Homebuilding Jobs

Hardhat tools copy

An accelerating rebound in new home construction over the next two years should finally give the U.S. economy the jump-start it needs to progress toward a truly robust recovery.

New home construction continues to bounce back from the lows of 2009, after the housing bubble burst, but still has a long way to go.

With housing one of the prime drivers of the U.S. economy - historically construction accounts for 5% of the U.S. gross domestic product (GDP) and related economic activity another 13% - a spike of activity in this area could drive the growth that's long been lacking from the recovery.

"A revival in new home construction will have a huge stimulative effect on the larger economy," Brad Hunter, chief economist for housing research firm Metrostudy, told Bloomberg News. "When home construction goes up, so does demand for furniture, tile, lumber, concrete, draperies, paint and appliances of all sorts."

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Paul Krugman May Be the World's Last Flat Earth Economist

Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again. He claimed earlier this week that fixing the deficit is important, but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
I don’t know how he can make that argument with a straight face.
For five years now, Dr. Krugman has argued that increasing U.S. government spending is vital to our nation's recovery. And for five years he's been dead wrong.
Dr. Krugman claims that "we" just haven't spent enough money... yet.
Here's why that makes him very dangerous...

The Trillion Dollar Trick

Trillion dollar coin

Minting a trillion-dollar platinum coin to pay our debts may seem ridiculous. But in fact, our government has done the same thing for the past five years, creating more than $1 trillion out of thin air each year.

Why The Fiscal Cliff "Deal" is Spelled P-O-R-K

Savings piggy bank

Behind the scenes of the Fiscal Cliff debate, there was plenty of f-bombing, poison pilling, and grandstanding leading up to the deal - and that was before the members of Congress and the Senate actually got serious with their usual ultimatums, followed by earnest- looking sound bites and posturing. But what gets me really riled up is the amount of "pork" contained in the bill...

Why Japan's "Lost Decades" Are Headed to America in 2016

It's only been a little more than a week since Shinzo Abe won election as Japan's latest Prime Minister in a landslide-election victory and the pundits are already lining up telling investors to "buy Japan" because it's "dirt cheap."

The hope is that Abe's promises of fresh stimulus, unlimited spending and placing a priority on domestic infrastructure will be the elixir that restores Japan's global muscle.

As a veteran global trader who actually lives in Japan part time each year, and who has for the last 20+ years, let me make a counterpoint with particular force - don't fall for it.

I've heard this mantra eight times since Japan's market collapsed in 1990 - each time a new stimulus plan was launched - and six times since 2006 as each of the six former "newly elected" Prime Ministers came to power.

The bottom line: The Nikkei is still down 73.89% from its December 29, 1989 peak. That means it's going to have to rebound a staggering 283% just to break even.

Now here's the thing. What's happening in Japan is not "someone else's" problem. Nor is it something you should gloss over.

In fact, the pain Japan continues to suffer should scare the hell out of you.

And here's why ...

The so-called "Lost Decade" that's now more than 20 years long in Japan is a portrait of precisely what's to come for us here in the United States.

Perhaps not for a few years yet, but it will happen just as we have already followed in Japan's footsteps with a "lost decade" of our own.

The parallels are staggering.

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