First Bank of the United StatesUS financial watchdog says economy at risk from 'non-ally' bondholders

Suzy Jagger and Gary Duncan

America's leading public finance watchdog has sounded a warning that the US economy is vulnerable to hostile financial actions by nations that are not its "allies".

David Walker, the US comptroller general, indicated that the huge holdings of American government debt by countries such as China, Saudi Arabia and Libya could leave a powerful financial weapon in the hands of countries that may be hostile to US corporate and diplomatic interests.

Charles Geist's Wall Street: A History notes that seven million of the original eight million dollar subscription for the Bank of the United States was held by foreign interests and that more than half the debt was held abroad in the early 1800s. America attracted risk-takers — and low interest rates simply do not excite them still.





Speak your mind

1 Comment so far

  1. Ronald Weber on July 24, 2007 11:02 am

    Why should you worry, if the are willing to accept such low returns while the Yale of this world are producing double digit returns?

    Even if the want to sell those bonds, what other choices do they have? It will either flow into our equity markets (thank you!) or it will flow into their domestic market. However, their markets are too small to absorb efficiently these huge liquidity inflows, and ultimately it will probably end up miss-allocated in ever-higher skyscrapers and other local ponzi schemes.


Resources & Links