Who Does The US Owe Most To?

Recently, the monthly data on who the major holders of treasury debt are was released. Overall, $3.162 Trillion of Treasury debt was held overseas at the end of February 2009, up 37.5% from a year before ($2.226.1 Trillion).

The largest holder and the largest increase in absolute terms is China, which holds $744.2 billion — a 52.4% increase from $486.9 billion in February of 2008. Japan is the next largest at $661.9 billion, but up only 13.5% from a year ago.

Next is a group that probably hides who the true holders are, the Caribbean Banking Centers. The collectively hold $189.1 billion of Treasury debt, and are up a stunning 82.0% from a year ago. They are followed by the Oil Exporters, at almost the same level, $181.7 billion, but who surprisingly had a much smaller increase, up just 24.0%.

Perhaps most striking about the list are some of the countries towards the bottom of the list. For example, Canada holds only $10.9 billion of our debt, down 51.1% from a year ago. This is less than one third the amount of our debt that Mexico owns ($37.9 billion). Thailand owns more ($39.7 billion) than twice the amount that is held by Israel, France, Italy, Sweden, the Netherlands and Belgium. Brazil holds more ($130.8 B) than those major European countries combined.

This data seems to be more evidence that the world’s economic center of gravity is shifting from what we have long termed the “developed” counties (roughly speaking the OECD, but not exactly, since both Mexico and Turkey are members of the OECD) to what we used to think of as the “third world.”

Clearly the developing world has taken a big economic hit with the current worldwide slowdown, but they may come out the other side of this in better shape than most people recognize. While many people point to China as America’s new bankers, clearly they are not alone, and far-off exotic locals are becoming increasingly important to the government in financing our debt, not just the traditional non-US financial centers like London, Geneva and Frankfort.

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