U.S. External Debt and Power: No. 37 (Council Special Report S.) - Softcover

Setser, Brad W.

Softcover

ISBN 10: 0876094159 ISBN 13: 9780876094150

Publisher: Council on Foreign Relations, 2008

Synopsis

The rise in China's trade surplus, the increase in oil prices, and a slowdown in demand for U.S. assets from private investors abroad has increased the United States' reliance on foreign governments for financing. U.S. banks and broker-dealers now draw on the Persian Gulf, Singapore, China, and to a lesser degree Korea to shore up their depleted capital base. The scale of these flows is stunning. In 2007 purchases of financial assets by China's government almost exceeded U.S. consumers' purchases of Chinese-made goods, and the increase in the Gulf's dollar holdings almost certainly topped direct U.S. spending on Gulf oil.This report examines whether America's ability to secure large quantities of external financing from foreign governments is a reflection of its political power, a constraint on its ability to exercise power, or a combination of the two. It posits that the constraints associated with U.S. dependence on other governments for financing are rising and that the U.S. current account deficit is now a strategic vulnerability, not a sign of financial strength. The report concludes with recommendations to address the current account deficit and to strengthen the United States' position abroad.

About this title

About the Author

Brad W. Setser is a fellow for geoeconomics at the Council on Foreign Relations. He is the coauthor of Bailouts or Bail-Ins: Responding to Financial Crises in Emerging Markets, a book examining International Monetary Fund policy toward crises in emerging market economies.

Edition details

• Publisher: Council on Foreign Relations
• Publication date: 2008
• ISBN 10: 0876094159
• ISBN 13: 9780876094150
• Binding: Paperback
• Language: English
• Number of pages: 48