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Nov. 18, 2008 12:03 PM PT _This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts._ Like nearly everyone else, the
Chinese wanted the security of holding short-term U.S. Treasury bills in September as markets worldwide crumbled. WITH CHINA’S PURCHASES OF T-BILLS THAT MONTH, THE COUNTRY SURPASSED JAPAN TO
BECOME THE NO. 1 OWNER OF U.S. TREASURY DEBT, ACCORDING TO GOVERNMENT DATA REPORTED TODAY ON FOREIGN INVESTMENT IN U.S. SECURITIES. The September numbers overall confirm that foreigners
still regard the U.S. as the best haven in times of international financial crisis. Net foreign purchases of long-term U.S. securities, including stocks and bonds, totaled $66.2 billion in
September, up from $21 billion in August and $18.4 billion in July, Treasury data show. As the global credit crisis worsened, slamming stocks, commodities and other markets, many investors
put safety of principal above all other considerations. That pushed them into short-term U.S. Treasuries. China increased its Treasury investments by $43.6 billion in September, lifting the
total to $585 billion and taking the No. 1 spot among all foreign holders. Japan, by contrast, reduced its Treasury holdings by $12.8 billion, to $573.2 billion. China’s Treasury purchases
in September were focused on T-bills, such as three- and six-month issues. The Chinese boosted their T-bill holdings by $39.4 billion in the month. ANY CAPITAL INFLOW TO THE U.S. HELPS US
FINANCE OUR BUDGET DEFICIT, BUT THE TREASURY’S GREAT NEED IN THE NEXT YEAR WILL BE TO LINE UP BUYERS -- INCLUDING FOREIGNERS -- FOR LONGER-TERM NOTES AND BONDS. The U.S. may have to issue as
much as $2 trillion in debt over the next four quarters to pay for the financial-system bailout, the war efforts in Iraq and Afghanistan and economic stimulus programs, as I noted in my
weekend column in The Times, here. The problem with huge cash inflows into short-term Treasury issues is that the money could flow out as easily as it flowed in, as T-bills mature in the
next year, notes George Goncalves, Treasury strategist at Morgan Stanley in New York. FOR A LIST OF THE LARGEST FOREIGN OWNERS OF U.S. TREASURY DEBT, GO HERE.
