401k Theft Prediction? "U.S. may face sovereign debt crisis"

[WhiskeyGirl]

OTTAWA -- Europe's debt turmoil has some people worrying the United States could soon be next to face its own sovereign crisis.

Luckily, however, the United States may be shielded for a number of reasons - from having the global reserve currency to the willingness of its once-spendthrift households to save and gobble up Treasuries.

The lesson here: It is not the amount of debt on the books that's crucial, but rather who holds the bonds. Yes, China and other foreigners continue to hold large amounts of U.S. Treasuries and continue to add to their positions - but at nowhere near the pace at which U.S. households, non-financial firms and banks are buying in the aftermath of that country's credit crunch.

Based on the latest data, as of Dec. 31, 53% of U.S. Treasuries were held domestically versus 47% foreign-owned. The split was closer to 50-50 at the end of 2008.

The trend has legs, analysts say, because the U.S. savings rate is expected to stay elevated as households rebuild wealth after the real estate bust.

Read more: http://www.financialpost.com/news-sectors/story.html?id=3015017#ixzz0nff2GYFG

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