(H/T – Instapundit)
I believe that Dad29, Asian Badger, Shoebox, and I have been warning about this for a while. The AP reports that China’s Premier, Wen Jiabao, is getting a bit queasy about his country having half its $2 trillion in currency reserves be US government debt. Wen said this at a news conference after China’s annual legislative session – “We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried…. I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
The Obama administration is hoping to finance its massive increases in spending through continued sale of those instruments. There’s two problems. First, the publicly-held portion of the debt is expected to double to something north of $22 trillion in the next 10 years. Given the expected anemic growth in the economy, that would put the debt over 100% of the GDP. Second, Social Security is expected to start running in the red inside of 10 years, which means all that loan paper that makes up the Social Security “Trust Fund” will start to be called to make up for the shortfalls. Meanwhile, nothing’s being done about it.
That isn’t exactly a recipe for guaranteed payback of issued debt. It’s a sad day when Communists understand the debt market better than the Gorons in DC.