On Independence Day 2011, we're more dependent than ever
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON — This year, as the nation celebrates Independence Day, the sputtering U.S. economy offers a stark reminder that today we're more dependent upon foreigners than ever before.
We need them to finance our debt; China and Japan together hold more than $2 trillion of U.S. Treasury bonds. We need them to supply much of the oil that's critical to our economy. We need them to make the shoes we wear and the gadgets that dominate our lives. We even need them to buy more of the products we make, as growing exports are vital to our economic rebound.
None of these dependencies is particularly new, but there's growing concern about how much economic independence we've lost.
"We're much more dependent than we have been, probably since the 1800s," said Clyde Prestowitz, a former U.S. trade negotiator and the author of the 2010 book "The Betrayal of American Prosperity."
"I think dependence per se is not necessarily a bad thing. The question is whether the dependence is working to your advantage or against you... Our dependence is growing in ways that are disadvantageous to us."
The most obvious example of dangerous dependence comes from foreigners owning our debt. Through April, the most current reading, foreigners held 31.4 percent of Treasury Department-issued securities, worth almost $4.5 trillion. (That's up sharply from June 2005, when foreigners held 24 percent of U.S. Treasury debt.) Two countries account for half of today's number — China ($1.152 trillion through April), and Japan ($906 billion).
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