Sunday :: Nov 28, 2004

Why Are Carribbean Banks The Only Remaining Market For Our Treasury Notes?


by Steve

Yesterday, in reading a solid story from the Times' Edmund Andrews about how foreign banks are dumping dollars, I noticed something both intriguing and troubling at the end of the story. As the story made the point that foreign central banks are dumping the dollar, it gave equal time to Treasury Secretary John Snow, and his belief that support for and demand for dollar securities remains strong and widespread. Then, in disputing Snow’s assertion, Andrews throws this in at the end of the piece:

"The market for U.S. Treasury securities is deep and liquid and continues to be attractive to a broad and diverse pool of investors," a spokesman for Mr. Snow, Robert Nichols, said.

That remains to be seen. According to the most recent Treasury data, the biggest source of growth in securities came not from China, Japan or Europe but from Caribbean banking centers.

Huh? While central banks are dumping the dollar, offshore Caribbean banks are the only remaining buyers of our treasury notes? Am I the only one who is wondering what is behind that, and who stands to make money from such an arrangement and for what purpose?

Steve :: 4:27 PM :: Comments (12) :: Digg It!