What'd I tell you?
For many reasons, it is a good thing that Obama and his team came to recognize this now.
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This Blog is a forum for an ongoing discussion of energy and politics. All political commentary is admittedly Libertarian AND Pacifist in its leanings in the extreme. If you have a particular bias to believe what you read in the Mainstream Media... this is not the Blog for you. If you are willing to question everything... read on!
7 comments:
I would think that all the original Dow 30 stocks (with the exception of the one surviving name -- General Electric) were at one point considered too important to fail too. But they did fail, or they became something else, and were absorbed, reconstituted or renamed. Obama cannot bail out everyone, but he sure seems hell bent on trying. And the stupid Chinese are funding most of it.
What is up with the Chinese? How do they not see that they are being left with a bag of empty promises? The weird thing is that although I abhor the government insolvent (I mean involvement), I have to admit that if this goes as bad as I am thinking, I will probably wish for the last 2 yrs. As you say bur, the shelf’s are full of food, the tanks are filled and we can go to Taco Smell at 2:00 in the morning.
Rumor has it that the Chinese have simply nowhere else to put all the money they get from us for their products, except to recycle those dollars back to the U.S. in the form of them buying our bonds. There is nowhere the Chinese can go to to buy the quantity of bonds they need to shelter all their U.S. dollars. They are effectively joined at the hip to us, and knowing that this cannot possibly continue forever doesn't seem to change very much.
There is presently no alternative to the US dollar as a reserve currency. the smaller, resource rich countries with lower debt levels do not have the money supply or liquidty to absorb the flows. The euro is in trouble, although it will survive long term it may decline further. The Japanese yen is even more risky than the dollar in terms of debt/GDP. I will add that the Chinese do not want the US to go bankrupt, in fact they will ensure that the US gets its fiscal house in order or they will come over here and do it for us.
they will come over here and do it for us.
Thats the part that worries me. What will the Chinese do when they figure out we can never pay back this debt and the progressives don't care if we ever do anyway?
On the bright side maybe the Chinese will take Kalifornia as trade. :)
The fed is loaning money to the money center banks at zero interest and then they are using it to buy t-bills and speculate. How long that goes on without the people realizing it is monetization with a slight twist to bamboozle us is anyone’s guess. The Chinese were diversifying their reserves away from the dollar however now that the euro is tanking...
It seems to me that the Fed HAS to print more and more dollars just to pretend that the US economy has a future. That will cause massive asset deflation, meaning US companies will become very cheap.
I still think China is playing the best game it can with the dollars it has; it will buy US assets on the cheap to convert its dollars into trading entities, brand names and potential markets, and then revalue the yuan and buy up the rest. It HAS to keep trading, whatever the rest of the world is doing.
America is still a huge market for its goods and gives access to Canada and South America, so it may as well own the outlets that sell them and repatriate the profits to China.
For a model of its approach, just look at Taiwan - a balance of threat and investment is slowly making Taiwan absolutely dependant on China again. Velvet glove, etc.
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