Out of My Mind 24

President of China’s visit brings up some interesting data

With U.S. debt on a skyward trajectory the question ofwhether we want to be even more beholding to those from whom we seek financingis being constantly raised. And usually when the question is asked the countrythey specify is China. However, with the visit of President Hu to the UnitedStates, some interesting information is starting to trickle out about just whohas more to lose should relations between our two countries go awry.

First of all, I was surprised to learn that China holds alot less of our debt than we are usually led to believe by the doomsayers.According to an economist on MSNBC the other day, China has 7.8 percent of theUnited State’s debt – that’s an obscene amount of money, but not nearly as muchas I would have guessed. To listen to some politicians China owns this countrylock, stock and barrel, while in reality 92 percent the U.S. debt is owned byothers. Nowadays we often hear that all China would have to do is cash in theirchips and we’d be out of luck and that they’ve got us under their thumb in allnegotiations because we owe them so much

However, it’s not quite so simple – China needs us a lotmore than we need them. We are the largest importers of Chinese goods. Thetrade deficit between our two countries is huge, we buy $296 billion worth ofgoods from the Chinese each year, while they only buy $69 billion from us. Andthe playing field is in no way equal, the average tariff on Chinese goods is2.5 percent, while the average tariff on the goods we export into China is 25percent, according to the same economist.

It wasn’t so long ago that we could have replaced the word”China” with “Japan” and the same things were being said. Maybe it’s just acase of owing so much to an Asian country that has us worried. The bottom lineis most countries have a vested interest in the U.S. economy because we buy somuch from everybody else – our consumerism is a major part of the survival ofmarkets in the developed and developing world. The reality is that without us they’reout of luck – so why do we always seem to be bargaining from a point ofweakness? Putting aside China’s dismal human-rights record, why can’t we tellthe Chinese that they need to reduce tariffs, realistically value theircurrency and more fairly open their markets to U.S. goods? It’s not because weowe them so much, it’s seems to be more likely that we’re willing to play fair,no matter how much it hurts the people back home in the form of jobs and futuretaxes, and they’re not.

So who owns most of the United State’s debt, the largest inthe world? It depends on where you look – once source I found said it wasChina, followed by Japan and the United Kingdom, with our neighbor to thenorth, Canada, being number eight in line. Another source said it was UK-basedfinancial institutions.

According to CNBC Canada is number 15 and economicpowerhouse Brazil is number 12 – I could have sworn that in my younger years itwas the other way around and Brazil was always negotiating with U.S. banks toforgive the debts that country owed. Also according to CNBC, and no surprise tomost, the oil exporters are 11th on our list of creditors; insurance companies,10th; depository institutions, ninth; the U.K. and state and local governmentstie for seventh, mutual funds are sixth, pension funds, fifth; Japan, fourth;China, third; other investors/savings bonds, second and surprise – the FederalReserve and intragovernmental holdings are numero uno.

Overall it doesn’t seem to matter who we owe – we’ve got tostart bringing the debt down so we don’t give other countries and financialinstitutions so much of a hold over our financial future.

On another who-owes-what-to-whome topic, I can hardly waitfor Wikileaks to tell us who in the U.S. has been hiding their money from theIRS in Swiss bank accounts. I think it will be particularly interesting to findout which of our poor overtaxed brethren and corporations have been expectingtheir fellow U.S. citizens to shoulder their share of the burden for theservices we use everyday from roads to hospitals, police and garbage pick up. Ican bet that it’s no one anywhere near our tax bracket.

About Gary DeVon

Gary DeVon is the managing editor of the Okanogan Valley Gazette-Tribune and celebrated his 25th year at the newspaper in August 2012. He graduated from Gonzaga University with a degree in Communications - Print Journalism, with an emphasis in photojournalism. He is a proud alumnus of Oroville High School. His family first settled in Okanogan County in the late 1800s. His parents are the Judy DeVon and the late Larry DeVon and he has two younger brothers - Dante and Michael. Many family members still call Oroville home. He is single with a grown daughter, Segornae Douglas and a young granddaughter, Erin.

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