The tiny country of Belgium – my beloved hunting grounds for three years a while back – with a GDP of $484 billion, a country which you can cross by bicycle in a single day if you’re really fit, a country that became famous to the chagrin of some people because it did just fine for a couple of years without a national government – well, that tiny speck of land is starting to grow an enormous mountain of US Treasury Securities.
In February, according to data just released by the US Treasury Department, it added $30.9 billion, taking its mountain of Treasuries to the phenomenal level of $341.2 billion, or about 70% of its GDP.
It put that speck of land with 11 million people in third place, behind export powerhouse China ($1.27 trillion) and former export powerhouse and now money-printing powerhouse Japan ($1.21 trillion), the second and third largest economies in the world.
From August last year, when an already lofty $166.8 billion in Treasuries were held in Belgium, holdings have soared by 105%! Why this sudden jump?
What the heck is going on in Belgium?
It has a vibrant export sector – right away, I can think of superb chocolates, addictive beers, and many other products. But have dollar-denominated sales multiplied umpteen times overnight in a miraculous fashion? Nope. Nothing happens quickly in Belgium. Getting even something minor through the bureaucracy, as we found out, requires superhuman patience, finely honed finesse, and a surprising amount of money. Nope, it couldn’t be anything having to do with Belgium’s real economy.
Leaves the other option: that Belgium has become a financial center for Treasuries owned by other countries, or that it at least has become a transit point for them.
Over the same period since August, Luxembourg, a true financial center with legendary opaqueness, saw its Treasury holdings decline from $143.8 billion to $136.8 billion. Ireland, where Corporate America registers much of its money to avoid US taxes, has also seen Treasury holdings drop since August from $120 billion to 111.4 billion.
