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Who do we owe all this money to?! Watch

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    (Original post by Huskaris)
    When governments are in debt they issue things called bonds. These bonds are bought by countries, institutions, and private investors.

    Oh and who can forget Quantitative Easing... The Bank of England also buy them

    We can not just "wipe slates clean" a lot of your parents pension funds would be tied up in bonds.
    Ok- i kind of get it- but i still find it confusing.
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    (Original post by Ewan)


    "Country foreign exchange reserves minus external debt"

    Not all countries are in debt.
    this doesnt look very right to me maybe its biased. It could just be dept in import and export wise.
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    (Original post by TheLloyd)
    Its in their best interests to keep the bonds, they will always have something over the US. Neither country is strapped for cash and America has the federal reserve and everything is traded in dollars.

    In theory they could legally take over American states etc.. But it is far from logical when you take into account America is paying off the interest and imports the most things from china.
    No they couldn't, America is a sovereign state. At best they could seize foreign assets. But anyway, this is getting silly
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    CHINA!!!!!!!!!!
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    (Original post by Paint-a-Picture)
    this doesnt look very right to me maybe its biased. It could just be dept in import and export wise.
    It very much is, the fact that they don't list japan as one of the "red" countries means that something is horribly wrong there...
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    (Original post by TheLloyd)
    Well America are in debt to China, they literaly can only pay the intrest of these debts. But China can't really do anything for 2 reasons;

    1. The size of the US military
    2. The main importer of Chinese exports is America


    China hold the most bonds for countries.
    I'm guessing you don't have a source because its untrue?
    Try it for the UK for instance.
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    (Original post by Quady)
    I'm guessing you don't have a source because its untrue?
    Try it for the UK for instance.
    http://www.treasury.gov/resource-cen...uments/mfh.txt

    There you go.
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    Ta, that is the USA but fine.

    So China has 875bn of 3.7tn of foreign owned US debt which is part of the approx 10tn US debt?

    How is 9% 'most' of the debt?
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    (Original post by Quady)
    Ta, that is the USA but fine.

    So China has 875bn of 3.7tn of foreign owned US debt which is part of the approx 10tn US debt?

    How is 9% 'most' of the debt?
    China has just over 20% of the debt owned by foreign countries, with Japan closely following. When you take these two nations you have just under half the foreign debt.

    Then when you take the foreign debt out and focus on the debt within the country it becomes clearer how much US owes to China. In 2007 56% of the debt was held by foreign countries, with china holding the largest share. Then with the 44% left, 66% of the 44% was held by banks of other countries, mainly the central banks of China and Japan.
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    (Original post by TheLloyd)
    China has just over 20% of the debt owned by foreign countries, with Japan closely following. When you take these two nations you have just under half the foreign debt.

    Then when you take the foreign debt out and focus on the debt within the country it becomes clearer how much US owes to China. In 2007 56% of the debt was held by foreign countries, with china holding the largest share. Then with the 44% left, 66% of the 44% was held by banks of other countries, mainly the central banks of China and Japan.
    So they aren't the largest holder...?

    And for comparison how much of Chinese and Japanese debt is held by the USA?
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    (Original post by Quady)
    So they aren't the largest holder...?

    And for comparison how much of Chinese and Japanese debt is held by the USA?
    They are the biggest holder of US foreign debt with over 20%. With Japan they hold just under 41% of the foreign debt combined. Take into consideration 56% of the united states debt is foreign debt. With the 3rd highest country owning foreign debt holding 9.2%.

    So that's 23% of the debt already.

    Then when you take the 44% of the debt within the country, 66% of that is owned by foreign banks mainly in China and Japan (correct figure unknown). So lets say it is 70% of the 66% that is owned by the banks in china and Japan.

    That equals 20% of debt owned by the banks.

    Together that's 43% owned by China and Japan. What is the highest % owned overall.
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    (Original post by TheLloyd)
    They are the biggest holder of US foreign debt with over 20%. With Japan they hold just under 41% of the foreign debt combined. Take into consideration 56% of the united states debt is foreign debt. With the 3rd highest country owning foreign debt holding 9.2%.

    So that's 23% of the debt already.

    Then when you take the 44% of the debt within the country, 66% of that is owned by foreign banks mainly in China and Japan (correct figure unknown). So lets say it is 70% of the 66% that is owned by the banks in china and Japan.

    That equals 20% of debt owned by the banks.

    Together that's 43% owned by China and Japan. What is the highest % owned overall.
    You're link said foriegn debt is £3.7tn, since the US debt is $13.5tn how is 56% foreign owned?

    Also you've hugely backtracked from

    'China hold the most bonds for countries.' to China and Japan own less than half...

    Also how much of Chinese and Japanese public debt is owned by the USA? This isn't a one way thing.
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    yes it completely is...the financial system in china and japan couldn't be further from the west, banks do a very very different job. the short story is that japanese banks hold the debt (e.g. Japan Post), the long one is you ain't in kansas anymore, the MOF is all powerful. china is more complicated as there are restrictions on capital movements, lack of data and i believe most of the borrowing is subsidized and at regional level either way foreigners aren't important.

    the reason why it is one way is because we have different models of economic growth...japan esp has been entrenched in the mercantilist/cheap currency mode since 1970s. US benefitted big time from this but the result is inevitable. japan's debt situation, altho worst in the world, is very different from elsewhere.

    (the figure for japan is 5% of outstanding bonds are owned by foreign holders...this is probably mostly china btw)
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    (Original post by Quady)
    You're link said foriegn debt is £3.7tn, since the US debt is $13.5tn how is 56% foreign owned?

    Also you've hugely backtracked from

    'China hold the most bonds for countries.' to China and Japan own less than half...

    Also how much of Chinese and Japanese public debt is owned by the USA? This isn't a one way thing.
    China and Japan hold the most for 2 nations. I worked it out from the information i could gather. China and Japan hold the largest % of the debt by far. If you want to look into it your self and find out if i am wrong, go for it, if it is the case i can accept that. America owes allot of countries money, some more than others though.

    I don't think that the Americans will ever publicly state how much debt they are truly in.
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    (Original post by TheLloyd)
    China and Japan hold the most for 2 nations. I worked it out from the information i could gather. China and Japan hold the largest % of the debt by far.
    Well no, because by your own figures the US owns more US debt that China and Japan combined.
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    (Original post by Quady)
    Well no, because by your own figures the US owns more US debt that China and Japan combined.
    Domestic Debt = 44% of the overall debt.

    66% of the 44% is owned by foreign banks.

    Leaves 34% what is owned by America.

    34% of 44% is 0.1496
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    i'm not totally sure your numbers are right either...total us public debt is around $13.6tr, total foreign holdings are $4.3tr. China's holding $900b, Japan's holding $875b.

    so around 30% of total us public debt is held overseas. 6.5% is held by China and 6.4% is held by Japan.

    it is completely common knowledge how much debt america is in. the reason why america owes money though isn't anything sinister it is because china and japan don't want strong currencies so they buy dollars (treasuries) and sell yuan/yen, america wants debt (which is the real quesetion) and japan/china are/were happy to give it because us go on to buy their gear. i would also add that high percentage of foreign holders is bad but just as bad is having a short maturity on your debt which means you need to go to the markets often.
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    (Original post by ChrisBan)
    This year, the government will spend £44 billion on loan interest. How does it not mean "****" if we're spending the equivalent of half the education budget on paying our debt interest?
    Because we are borrowing £150bn this year so we aren't paying the interest.
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    (Original post by DJKL)
    You do not have a choice. Given the amount of goods we import, including food, if we were to not honour our debts the exchange rate of the £ to other currencies would plummet, the cost of all these goods we consume would spiral upwards, eventually nobody would be prepared to deal with us in sterling. Look at the Euro exchange rate and its movement relative to sterling over the last 12-18 months.
    This is something I've never understood: how does the exchange rate affect the economy? Whether one pays X€ or £Y for a good, in the end it is still the same price, isn't it?
    I get it a Euro country would rather commerce in euro to avoid having to change, but why would, say China with their yuan, prefer to pay in € or £ if in the end the price is the same?
    Or is it that a good doesn't have the same value depending on what currency is used to buy it?
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    (Original post by Xurvi)
    This is something I've never understood: how does the exchange rate affect the economy? Whether one pays X€ or £Y for a good, in the end it is still the same price, isn't it?
    I get it a Euro country would rather commerce in euro to avoid having to change, but why would, say China with their yuan, prefer to pay in € or £ if in the end the price is the same?
    Or is it that a good doesn't have the same value depending on what currency is used to buy it?
    Whether they are the "same" price depends on the exchange rate. If I was a Chinese company selling to the UK what I am really interested in is how many Yuan I will actually receive. (Presuming most of my costs are in Yuan) With a stable exchange I may be happy to mark the price in sterling, Euro or US $, however if one of these currencies is drifting relative to the others or to Yuan I am not going to be very happy agreeing a price now for delivery and payment in the future. If I agree the price in sterling, but by the time I am paid sterling buys only 70% of the Yuan it did, I might make no profit, maybe even a loss.

    In the above circumstance I might start selling marking the price in Yuan, if Sterling drops the importer in sterling terms has to pay more, he needs to pass on this cost. If this is happening to all importers of the item, the price of it, in sterling terms within the UK, will rise.

    I appreciate most substantial contracts will be hedged, however with sterling weak the hedging costs will rise, these need to be absorbed by the importer in his selling price.

    In addition if sterling is weakening it will be sold and other currencies bought, this selling will put further downward pressure on Sterling and upward pressure on the acquired currency.

    In effect a weak currency will make imports more expensive but exports easier as they will become relatively cheaper. It is what some of the troubled Euro nations would like to be able to do, however they are tied into a currency they cannot devalue. For a net importer a weaker currency will lead to inflation, not an absolute "bad" outcome if controlled (very effective in reducing national debt on paper) however not that easy to control and there are very few tools a nation has to keep inflation in check. (Money supply, interest rates, Taxes)
 
 
 
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