Niall Ferguson on Spending Cuts

It's a good idea to absorb as much Niall Ferguson material as you can get your hands on. It keeps one ahead of pack at the water cooler.

Maybe, just maybe, the Chinese have noticed what the rest of the world’s investors pretend not to see: that the United States is on a completely unsustainable fiscal course with no apparent political means of self-correcting.

At some point within the next decade the US will reach the crossover point at which it will be spending more on debt service, on interest payments than it is able to spend on defense. Now remember, half the federal debt in public hands is in the hands in foreign creditors. Out of that a fifth, to be precise 22 percent, is in the hands of the monetary authorities of the People’s Republic of China, down incidentally from 27 percent in July last year.