FINANCIAL REALITY

As much as Obama, as well as all other Americans, are focused on the rapidly approaching initial conclusion of the White House sponsored medical reform legislation, it is impossible to ignore the ever growing US government debt.



The acknowledged federal government debt, according to the most recent figures released by Washington, is just over $12.6 Trillion. This is a real concern but is no surprise in that America continues to be not just in debt but in record debt.



These most recent figures [as of January of 2010] show that Communist China remains our largest creditor by holding $889 Billion in Treasuries followed by Japan which can claim a $765.4 Billion share of the American debt. Of greater interest are the facts that 1) the Chinese holdings are at their lowest level since June of 2009; 2) China dropped its holdings by $5.8 Billion in the month before the latest reporting; 3) Japan lowered its holdings in the same time period by $300,000,000.00; 4) England upped its American Treasury holdings by $28 Billion; and 5) OPEC upped its interests by $11 Billion. It is easy to rationalize how OPEC had excess funds so to allow a multi billion dollar investment. However, the question must be asked at to how a financially challenged nation like England could find and expend the said $28 Billion.



The more difficult question is centered on how the United States will repay all these obligations.



The Obama Administration has conceded that the American economy will not have a"robust" growth during this year and that the number of our unemployed will remain roughly the same during 2010. These two prognostications, if they become fact, have been viewed by many economic experts as elements of a looming world wide inflation and of the real possibility that America as well as other nations will be hard pressed to raise needed operational money via international borrowing. The above numbers already show China and Japan moving away from the funding of America. This leaves tax growth as the only viable source of needed additional government income.

Options available to Obama are not of great number but there remains the very drastic action of an American devaluation of its Treasury obligations. The implications, almost all bad, are many but some form of meaningful action is needed or we will watch for the next several years to come the national debt continue to rise; the availability of foreign investment continue to diminish; and the American economic leadership become at best marginal.

These are true elements of a pending failure of at least our economy and perhaps even more.