Wednesday, September 28, 2011

American myths often trump the "facts"...they do in naming debt holders

Who owns America? Hint: It's not China
By Tom Mucha, Global Post, from CNN/Global Public Square website, September 28, 2011
Truth is elusive. But it's a good thing we have math.
Our friends at Business Insider know this, and put those two principles to work today in this excellent and highly informative little slideshow, made even more timely by the ongoing talks in Washington, D.C. aimed at staving off a U.S. debt default.
Here's the big idea:
Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt.
But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt.
Here's a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:
•Hong Kong: $121.9 billion (0.9 percent)
•Caribbean banking centers: $148.3 (1 percent)
•Taiwan: $153.4 billion (1.1 percent)
•Brazil: $211.4 billion (1.5 percent)
•Oil exporting countries: $229.8 billion (1.6 percent)
•Mutual funds: $300.5 billion (2 percent)
•Commercial banks: $301.8 billion (2.1 percent)
•State, local and federal retirement funds: $320.9 billion (2.2 percent)
•Money market mutual funds: $337.7 billion (2.4 percent)
•United Kingdom: $346.5 billion (2.4 percent)
•Private pension funds: $504.7 billion (3.5 percent)
•State and local governments: $506.1 billion (3.5 percent)
•Japan: $912.4 billion (6.4 percent)
•U.S. households: $959.4 billion (6.6 percent)
•China: $1.16 trillion (8 percent)
•The U.S. Treasury: $1.63 trillion (11.3 percent)
•Social Security trust fund: $2.67 trillion (19 percent)
So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.

It would be an excellent idea if this kind of information made the front covers of all dailies in the U.S. The myth that China holds the elephant share of the American debt is both large and well established. And the myth has been substantiated by much of the media coverage of the last two or three years. It is an American cultural tradition that the U.S. has to have an enemy. And, even in the midst of the "debt" debate, that China holds most of the U.S. debt has been another layer of mythology to enhance the drama of the crisis. The spectre of the Chinese "calling in" their debt, and thereby foreclosing on the U.S. economy, has likely been used by all sides in the debate to garner attention and credibility in their arguments both about the need to "attack the problem," (another of the American myths, that is siamese to the "enemy" component of the myth) and to bring public attention to how hard that task is.
Military metaphors abound in a country conceived on the battlefield, delivered in the forge of gunfire, and sustained by an NRA addiction that continues to infest both the Second Amendment, giving the right to bear arms, and the laws of many states, making the U.S. the most armed and fortified country in the world.
After 9/11, the U.S. has found another enemy against which to build another 'pentagon'...and they call it "AlQaeda" and all of its many forms.And now the most targetted city, New York, has 50,000 people employed by the Police Department, 35,000 officers, and 15,000 civilians, with the latest technology on all streets, subways, bridges, rivers and many targetted buildings in Manhattan....When the U.S. "prepares for an attack" from a perceived enemy, there is no country that takes those preparations to the nth degree, as does the U.S.
Going overboard is never something they consider.
Going overboard in their political debates, media coverage of those debates, and even the cultural mythologies to enhance those debates is also never part of the calculus.
Doing a reality check on the facts is often sacrificed to the presentation of the political theatre that is another overriding archetype of America.
However, the debt crisis will not have to face the potential crisis of Chinese foreclosure, if these facts are borne out in the Treasury.

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