Monday, September 26, 2005

China Is Buying More And More U.S. Treasury Bonds

A major problem for the U.S. is how to pay for the Katrina and Rita relief efforts. And with the cost of the Iraq War topping $196.4 billion, or $1,768 per family, or $785 per person, as well as a Bush Administration that has failed to balance the federal budget, or to even veto a single spending bill, the costs to fund disaster relief are indeed very scarce.

Recently congress even passed a $286.4 billion highway bill. This contained a full 6,376 pet "pork" projects valued at $24 billion, including funds for a horseriding facility that the average American will never be able to use, yet is expected to pay the costs for.

All of this "tax and spend" government is financed by the sale of U.S. Treasury bonds. And many of the biggest bondholders are foreign states such as China. In the beginning of 2004, China held $151.6 billion in bonds. Today China holds $242 billion in U.S. Treasury bonds. Among the $4.1 trillion dollars in bonds available for purchase, Japan holds 679 billion, down only slightly from a year ago. And Carribean states hold another $137 billion. And theU.K holds $122 billion. And South Korea holds $69 billion.

Bonds are like a credit card debt that many Americans find themselves involved in. The interest continues to build as a national debt that just never seems to get paid off. But the U.S. government is in no position to argue. It needs the money, so it must sell America to foreign states to continue to function and not go bankrupt. And this reckless pattern of debt is from an administration that promotted "bankruptcy reform" for small family credit card debtors, while itself engaging in a pattern of far more dangerous and reckless spending, borrowing and debt.

While a state like China takes more and more U.S. jobs through "outsourcing", it also wields more and more clout to prevent fair trade demands from the U.S. And the high dollar value of bonds also blocks the U.S. from any meaningful role insisting on demands for human rights reforms or an end to religious persecution of groups like Christians in China. And executions of "state enemies" is still a common practice in China.

China will take away millions of America jobs with "outsourcing" , paying only 24-40 cents an hour labor to workers, and turn these huge profits into buying more and more U.S. Treasury bonds until it eventually owns the lock and key to the U.S.

A Communist nation like China never has to engage the U.S. in a military conflict. By purchasing America "one piece at a time", just like the old Johnny Cash song, is how this nation is gaining more and more influence and power over the U.S.

This is the unfortunate fact of how Katrina and Rita disaster relief will be purchased. It is a devil's bargain, where for short term benefits the future of America is sold to foreign powers like China.

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