Editorial: Federal debt ... Foreigners show some faith

Perhaps it verges on the un-American to say so, but foreigners seem to have greater faith in our political leadership than we do, particularly in reference to settling the debt problem and avoiding default. And how do we know this? They vote with their money.

Americans, supposedly irredeemable optimists, don’t share that faith.

A new Washington Post-Pew polls shows that over half — 53 percent — have little or no confidence in the ability of the president and the congressional leadership to resolve the debt debate.

A USA Today Gallup poll shows fully half of Americans believe this president and Congress are doing a worse job than their predecessors, which puts them in some pretty bad company. Those are the people, after all, who got us here.

Those polled were evenly split on whether our leaders can even reach a deal. The two political parties were in especially low odor, with congressional Democrats getting a 33 percent approval rating and Republicans 28 percent. It’s safe to say the politicians aren’t feeling the love.

But somebody out there likes us.

The Treasury said this week that foreign investors bought $38 billion in U.S. government debt in May, increasing their holdings to $4.51 trillion.

China, which is given to occasional mutterings about U.S. solvency, increased its holdings by $7.3 billion to $1.16 trillion. Other big buyers like Japan and the United Kingdom also increased their holdings.

Meanwhile, 10-year Treasury bills were considered so low-risk the yield tailed off this month to less than 3 percent.

One money market analyst told the Associated Press, “The market is assigning a new near-zero probability of a default happening.” As AP business writer Christopher Rugaber observed, “The rest of the world still trusts Uncle Sam to make good on his word.”

Let’s hope the foreigners are right and we’re wrong.

© 2011 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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