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Trump presidency has seen foreigners flock in as Treasury debt buyers

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The importance of these numbers cannot be understated. If one segregates the buyers of U.S. debt into its four main categories foreign buying is most important. Presently, it is believed that foreigners own 31.2 percent of outstanding U.S. debt. American households and businesses own 29.1 percent; Social Security and other government pension funds own 27.5 percent; and the Federal Reserve holds 14.2 percent. There is 2 percent double counting in the figures mainly in the amount held by Americans.

This fiscal year due to the tax cut, higher interest rates and possibly other new fiscal programs, it is expected that the government must raise possibly another trillion dollars along with refinancing a portion of the $20 trillion already owed.

The Federal Reserve does not want to contribute. The Social Security funds may not have much in incremental dollars to contribute. Americans want higher interest rates to contribute. So the expectation is that foreigners will not only not sell the U.S. debt that they have but they will add more.

Thus, the Treasury Department’s new figures are very encouraging and more than a little surprising. Cutting through the rhetoric, if foreigners believe in the Trump economic program and are willing to contribute to make it work, interest rates at the long end of the curve may not move as high as is now currently projected by many.

If the foreigners do not step up, then there will be problems. Someone has got to buy the increased debt. The federal government does accept voluntary contributions.

— Richard X. Bove is an equity research analyst at Vertical Group and the author of “Guardians of Prosperity: Why America Needs Big Banks” (2013).

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Armin Laschet picked as new leader of Germany’s ruling CDU party 

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Candidate for the chairmanship of Germany’s Christian Democratic Union party, Armin Laschet, gestures as he takes part in a discussion at the party’s headquarters in Berlin on Jan. 8, 2021.

CHRISTIAN MANG / POOL / AFP) (Photo by CHRISTIAN MANG/POOL/AFP via Getty Images

FRANKFURT, Germany — Germany’s ruling CDU party picked Armin Laschet to be its new chairman on Saturday, possibly paving the way for him to replace Angela Merkel as chancellor at elections later this year. 

Laschet is currently the prime minister of Germany’s North Rhine-Westphalia region, the most populous federal state in the country. He beat rival Friedrich Merz by 521 to 466 in a vote that was forced online due to the coronavirus pandemic.

Born in 1961, he was first elected to the Bundestag (German Parliament) in 1994 and his election is seen as a continuation of Merkel’s policies, as he has pledged to keep the CDU firmly in the “middle of society.” 

With him as chairman, the CDU will likely stay on message and focus on more climate change policies and environmental topics. He has a strong Catholic background which brings him support from Christian circles within the party. 

He is a trained lawyer and also worked as a journalist at the time of German reunification between 1986 and 1991. He is seen as being very liberal and is popular with the immigrant community in his home state.

If he becomes the CDU’s candidate for chancellor at September’s elections, he could be open to various coalitions — power sharing is somewhat of a recent tradition in German politics.

He has floated the idea of a government alongside the liberals, the FDP, in a bid to win over parts of the business camp inside the CDU. But he is also seen as a natural fit for a coalition with the Greens too, as he is on good speaking terms with the party and favors environmental issues.

But the CDU’s candidate for chancellor will only be determined in the spring. And it’s not certain that the newly-elected chairman will automatically move into Merkel’s role. Markus Söder, the very popular Bavarian prime minister, and also Jens Spahn, the current health minister, may also join the race to lead Europe’s largest economy.

Merkel stepped down as leader of the CDU in 2018, and her replacement Annegret Kramp-Karrenbauer quit in February 2020 after a series of communication mishaps exposed her as being too weak to lead the chancellery.

This is a breaking news story, please check back later for more.

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Biden heads into inauguration with a stock market tailwind

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Biden heads into inauguration with a stock market tailwind

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