-->THE FOREIGN SECTOR

A few weeks back, the US Treasury released November 2003 numbers for foreign purchases of US Treasuries. As of October month end, the foreign community owned 41% of total marketable US Treasuries outstanding. As of November month end it was 42.2%. Will it be another 58 months or less until the foreign community owns all marketable US Treasury debt? Of course this is a sarcastic comment, but directionally the increase in foreign ownership of US Treasuries has been going straight up for the past few years literally by the month. When we broke apart the November numbers, 72% of total November Treasury buying came from five Asian countries - Japan, China, Hong Kong, Taiwan, and Korea. As you remember, in early 2003 the Fed threatened to essentially monetize US debt (buying bonds with money that was basically"printed" out of thin air) if deflation were to become a significant problem stateside. The Fed never had to make good on this threatened promise as Asia has been doing the job for them, deflation or no deflation....

http://www.contraryinvestor.com/mo.htm


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