Originally published February 23 2006
Foreign investors gaining leverage over U.S. economy
by Mike Adams, the Health Ranger, NaturalNews Editor
Addison Wiggin, editorial director of The Daily Reckoning, explains how foreign investors and banks are gaining power over the U.S. economy, particularly China and Japan.
The Federal Reserve is losing its influence over America's economy, one expert warns, a fact highlighted by the recent chaos in the Japanese stock market.
On Wednesday, trading on the Tokyo Stock Exchange was halted when an overflow of sell orders threatened to crush the exchange's archaic computer systems.
This latest blow to the world's second biggest stock exchange could undermine the Japanese capital markets, just as the country's economic recovery was gaining momentum.
But for American investors, the real danger is that investor capital could flee Japan and run back into U.S. Treasuries.
"The lesson," says Addison Wiggin, author of NY Times bestseller Empire of Debt and editorial director of The Daily Reckoning, "is that the globalization of the financial markets has placed an ever more precarious amount of U.S. debt in the hands of foreign central banks and investors.
Japanese investors buying U.S. debt and inverting the yield curve is just one example.
"If China wanted to start selling U.S. debt rather than gobbling it up," warns Wiggin, "they could really drive up interest rates in our country.
"Right now, the Chinese would be crazy to upset the trade cycle in place.
Addison Wiggin is editorial director and publisher of The Daily Reckoning.
He is also the co-author, along with Bill Bonner, of the recently released New York Times bestseller, Empire of Debt: The Rise of an Epic Financial Crisis.
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