As the US Treasury releases data on major foreign debt holders, the Council for Geoeconomic Studies has a cautionary tale on the foreign ownership of debt. Hank Paulson apparently claims Russian officials approached the Chinese in the summer of 2008 suggesting both countries sell off large amounts of debt issued by Fannie and Freddie. The Chinese apparently declined (see chart).
CGS warns on the dangers of relying on foreign banks to buy one’s debt. In addition to food security and energy security, should we now fret about debt? Maybe the Japanese have the right idea, encouraging their menfolk to buy bonds….