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EXCERPT FROM RUNNING ON EMPTY by Jim Sinclair

"America's deficit is now financed mainly by foreign governments not by investors. The major purchasing influences that are now financing the US are the Asian/Islamic governments who remain the largest consumers of US Federal debt instruments. Yes, Japan holds the record as the largest single owner with 14% of the US Federal Debt.

But Asian/Islamic interests have recently become huge buyers too. That being the case, the supply of funds to finance this budget deficit could be shifted by the changing seas of politics.

There is a new and extremely disturbing change occurring right under our noses. The financial condition of Americans themselves has now shifted to a point of equilibrium whereby national savings are turning net negative.

So with the US Current Account Deficit growing in an uncontrolled manner, one could easily conclude that this country is now relying on Asian/Islamic governments rather than foreign investors or their fellow Americans to finance US consumer purchases and the US budget deficit.

This is a position of weakness never before experienced in American history since the industrial revolution. Add to these unique factors, the proposition that any drop in the value of homes will put the US consumer under water with respect to their home equity financings and presto: "Houston, we have a problem!"

In plain English, the US has become a beggar nation and the Asian/Islamic governments our only hope for an economic revival. Do you see anything wrong with that picture?"


[For the rest of this insightful essay, go here.]