Pamela Donehower, of Middleburg, Va., left, John Holman, of Denver, Colo., center, and others with the group “No Labels” rally on Capitol Hill in Washington on Monday to urge Congress and the president to find a bipartisan solution to the fiscal crisis.By CHRISTOPHER S. RUGABER and JONATHAN FAHEY
AP Business Writers
WASHINGTON – The rest of the world still trusts Uncle Sam to make good on his word.
Bitter and so-far fruitless debate in Washington about America’s looming borrowing limit has raised the prospect that in 14 days the U.S. will default on its enormous debt for the first time in history. But foreign investors don’t seem too concerned. They bought $38 billion in U.S. government debt in May, increasing their holdings 0.6 percent to $4.51 trillion, the Treasury Department said Monday.
Foreign investors’ love of U.S. debt isn’t as blind as it might appear, though. Investors expect lawmakers to raise the borrowing limit to avoid a potential global financial crisis. They also expect that the federal government would choose to cut spending if they can’t agree on new spending limits, rather than withholding interest payments to bondholders.