As the economic situation of the world continues to develop, will the world’s creditor nations still be able to support the world’s debtor nations? The creditor nations in Asia are obviously one large facet of that question. Petroleum exporting nations are another. As of October 2008, petroleum exporting countries held just over 6% of all US Treasury Securities, or about 187 billion dollars worth. In today’s WSJ, Dubai Plans 11% Increase in Spending,
The city-state’s finance department estimates the new spending will result in a modest fiscal deficit, Dubai’s first ever. Other Gulf governments, including Saudi Arabia and Oman, have announced recently they will risk deficits next year instead of cutting back on spending.
Dubai is probably not of huge concern because, since it exports little petroleum, it has never had to park large surpluses in foreign securities (US Treasuries). Oil countries are a concern but even with a year ir two of deficit spending, they will still have huge reserves remaining. But will existing reserve be enough to fund the planned growth in US Government Debt?