So, for the past several years, the common talk has been, “The US economy is being propped up by foreigners buying all our debt.”
I was always a bit concerned about this, but never thought it would affect me, personally.
Well, yeah, about that debt. I thought it was just US Treasuries that everyone was buying.
How could I have been so naive (read, stupid).
According to the Inman News blog:
According to HUD, in 2006 China held $107.5 billion of MBS backed by Fannie Mae, Freddie Mac, and Ginnie Mae — a seven-fold increase from 2003.
“After seeing how the property prices in China kept soaring, these Chinese companies never thought of the US property market as having problems and they bought a lot of mortgage-backed securities, particularly in the past two years,” Yi said.
HUD says foreign investors held 9.7 percent of agency MBS in 2006 — nearly double the 2004 share — and that Asian nations held 58.6 percent of those securities, compared to 37.3 percent in 2004. Sounds like a long shot that those trends will continue.
I never expected a sell-off in the financial markets would be something to worry about.
Well, it is!
Read on: China: Won’t get fooled again – By Matt Carter, Inman News blog, quoting Bill Gross, PIMCO, August newsletter
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