effectively 0% interest rate

[Kokop]

US economy is heading into deflation, like the Japanese economy has been for many years.

Agreed, but deflation will be very sort term (6-12 months) If that.

Yes but the Japanese had savings to use, the US has?????

Oh Gold, hmmm, Manufacturing, Hmmm, I dunno, Oh yes T bills, yes, that's it (as long as the Asians buy them)

They will have to devalue and print like the Reich Mark to try get out of this quandary.

How else you you right of that sort of debt? Screw the world? Yeeha!!

Well don't screw yourself when you have that type of although extended, military strike force. (talking tactical long range stuff, not ground units)

Alternatively, China/Japan call in the T bills?? Then what??

"Maybe soon we'll be playing monopoly with USD's."

Oops, the fist full I had are gone already, before the spike (damn, and that was only USD 100) (sorry poor boy here, but wait, I have eiloff str!!)

Dunno, this is am sure for all of you, and all economists for that matter, a horrific accident, in slow motion, and know one, believe me no one, knows how it will really turn out.

(I really hope I am misguided and misinformed on this but...)

Anyway, enough ranting for the night.

I have no clue. That's the only certainty I know for sure.

So do not take my advice, its only my misguided opinion.

Thanks for the input

Ko

 

[Kokop]

PeterCH,

Who controls the WTO?

Is it the same as the UN?

Honest questions as the most of the 3rd world seem to get the wrong end of the stick on subsidies from the WTO and I actually do not know.

Cheers.

K

 

[Syndyre]

US economy is heading into deflation, like the Japanese economy has been for many years.

US economy will remain no 1. Don't worrry kids. Europe is in a worse economic crisis (of its own--nothing to do with the US one), China is facing slow downs and therefore instability and has a demographically ageing population, oil producers are bankrrupt (outside of the Emirates, Kuwait and Saudi Arabia) and Japan has been in a recession for many years now with an ageing population and a national debt of 180% of GDP. The Saudis, China (1.9 Trillion) and Japan (1 Trillion) hold massive amounts of USD reserves and don't want the USD to tumble either. So while everyone will deteriorate, the US with stable fundamentals, massive country with excellent infrastructure, increasing population, safe geopolitics and command and control of the seas and air will continue to have the No 1 economy.

Meanwhile China has lost it's appeal to the WTO over car part import tariffs. Looks like things will get even tougher for that favourite darling of all US-haters, China.
http://www.business-standard.com/in...o-gainwtos-ruling-against-china/01/01/343596/

The US may remain number 1 and will for quite a while but I don't think they'll be as powerful as they once were, at least not in relative terms.

Agreed, but deflation will be very sort term (6-12 months) If that.

Yes but the Japanese had savings to use, the US has?????

Oh Gold, hmmm, Manufacturing, Hmmm, I dunno, Oh yes T bills, yes, that's it (as long as the Asians buy them)

They will have to devalue and print like the Reich Mark to try get out of this quandary.

How else you you right of that sort of debt? Screw the world? Yeeha!!

Well don't screw yourself when you have that type of although extended, military strike force. (talking tactical long range stuff, not ground units)

Alternatively, China/Japan call in the T bills?? Then what??

"Maybe soon we'll be playing monopoly with USD's."

Oops, the fist full I had are gone already, before the spike (damn, and that was only USD 100) (sorry poor boy here, but wait, I have eiloff str!!)

Dunno, this is am sure for all of you, and all economists for that matter, a horrific accident, in slow motion, and know one, believe me no one, knows how it will really turn out.

(I really hope I am misguided and misinformed on this but...)

Anyway, enough ranting for the night.

I have no clue. That's the only certainty I know for sure.

So do not take my advice, its only my misguided opinion.

Thanks for the input

Ko

Everyone seems so happy to buy US treasuries at the moment that the yield actually went negative for a while, they won't have a problem financing it for a while.

That's the real problem is that nobody knows. Everything's always clear in hindsight. Now its easy to see they should never have let Lehman fail. What will be obvious in 6 months that isn't now?

 

[PeterCH]

PeterCH,

Who controls the WTO?

Is it the same as the UN?

Honest questions as the most of the 3rd world seem to get the wrong end of the stick on subsidies from the WTO and I actually do not know.

Cheers.

K

The WTO is a world body and it makes decisions in a neutral way. Countries are free not to be in the WTO however there are advantages to being in the WTO.

Did you see the forecast on China's growth of 5% next year. China needs 9% at this time to keep the new workers coming in to the job market employed and the unemployment is highest since 2003. CHina is responding by subsidising exports (not growing
it's internal consumer market but by subsidising inefficient Communist Party official run companies) in an effort to control unemployment. At the same time China is talking of devaluating the Yuan even further - the Yuan is terribly devalued as is. The US, EU and Japanese are putting up trade barriers in response. A trade war is possibly imminent. A war like that could destroy China if unemployment rises - the Chinese CP may be overthrown and serious internal strife in China would follow.

Japan has a national debt of 180% of GDP. That's the highest for any country. It's bailouts have consisted of massive public spending and it's economy has been in recession for 8 or more years. Japan is in a far worse shape than the US, it has an aging population, a resource poor country and is surrounded by hostiles - Koreas (both) and China.

US on the other hand has the best fundamentals out of any country on earth. I already mentioned why and despite a major debt - it is the reserve currency and the richest states want things to stay that way. The US is the only country which can have a strong currency despite a huge debt because its economy is so big and is so stable and the outlook for the US is good - demographically and geopolitically that is while the outlook for Europe, Japan, Korea and China is not.

I don't think we'll see a situation where the Dollar becomes worthless or terribly devalued. I think if that happens other currencies will be worth less,
anyway we'll see but I think all the talk of US economy collapsing and Dollar crashing are not going to materialise. Remember the US went through the Great Depression and came out as the strongest nation and largest economy on earth.

US magazines are just fear mongering.

 

[PeterCH]

The US may remain number 1 and will for quite a while but I don't think they'll be as powerful as they once were, at least not in relative terms.

You are assuming the US will deteriorate while everyone else will grow.
Look at China:

The proportion of elderly people is growing faster in China than in any major country, with the number of retirees set to double between 2005 and 2015, when it will reach 200 million. By midcentury, 430 million people — about a third of the population — will be retirees. That increase will place enormous demands on the country's finances and could threaten the underpinnings of the Chinese economy, which has thrived for decades on the cheap labor of hundreds of millions of young, uneducated workers from the countryside

http://www.iht.com/articles/2007/03/20/news/china.php

Do you think a country with 33% of its population in old age homes can grow its economy or remain competitive all the while its chief industries have been heavily subsidised and terribly inefficient?

You said 'relatively' --- relatively to who?
India?
South America?
Africa?

Japan and Europe are in a similar situation to China.

 

[Kokop]

The WTO is a world body and it makes decisions in a neutral way. Countries are free not to be in the WTO however there are advantages to being in the WTO.

Did you see the forecast on China's growth of 5% next year. China needs 9% at this time to keep the new workers coming in to the job market employed and the unemployment is highest since 2003. CHina is responding by subsidising exports (not growing
it's internal consumer market but by subsidising inefficient Communist Party official run companies) in an effort to control unemployment. At the same time China is talking of devaluating the Yuan even further - the Yuan is terribly devalued as is. The US, EU and Japanese are putting up trade barriers in response. A trade war is possibly imminent. A war like that could destroy China if unemployment rises - the Chinese CP may be overthrown and serious internal strife in China would follow.

Japan has a national debt of 180% of GDP. That's the highest for any country. It's bailouts have consisted of massive public spending and it's economy has been in recession for 8 or more years. Japan is in a far worse shape than the US, it has an aging population, a resource poor country and is surrounded by hostiles - Koreas (both) and China.

US on the other hand has the best fundamentals out of any country on earth. I already mentioned why and despite a major debt - it is the reserve currency and the richest states want things to stay that way. The US is the only country which can have a strong currency despite a huge debt because its economy is so big and is so stable and the outlook for the US is good - demographically and geopolitically that is while the outlook for Europe, Japan, Korea and China is not.

I don't think we'll see a situation where the Dollar becomes worthless or terribly devalued. I think if that happens other currencies will be worth less,
anyway we'll see but I think all the talk of US economy collapsing and Dollar crashing are not going to materialise. Remember the US went through the Great Depression and came out as the strongest nation and largest economy on earth.

US magazines are just fear mongering.

Very Informative an concise post there PeterCH.

I cannot fault the logic of your post.

Trade barriers/wars will be part for the new Depression/protectionism. I think you have really valid point, until meltdown. They will have to fight or come to a realistic agreement.

However....

If the asians decide to stop buying Tbills????

Look at the Yen v Dollar, its not helping the "surplus" of Japan right now. How does Japan get the exchange rate back to yen 100, or even 110??

Same can be said for China, S korea, all surplus nations.

They are getting hammered by the USD strength.

The usd needs to lose value, how else to earn off shore money with oil revenue "dried up", not like their car industry is making a killing in SA (probably better profits than the entire EU) How else to reduce the debt...

For a developed nation, I agree the US can recover quicker, their labour laws are, in my mind, what the world should adopt.

(tried to release anyone lately here?)

But, the underlying debt, personal and government is unprecedented.

I would like to see a verified source re Japan's 180% debt. Perhaps government, but not personal, which will be key in this "smash".

Also, what is the US government debt by percentage, v personal?

Perhaps only "bettered by the UK" in personal terms if memory serves me right.

The Japs and DE's have some the best personal saving rates (even at .5% interest for the Japs) in the world.

Correct me if I am wrong.

Anyway.


Hear the tyres screaming, I do, not sure what direction that they are coming from.

PS great post TBO

Ko

 

[Xarog]

US economy is heading into deflation, like the Japanese economy has been for many years.

US economy will remain no 1. Don't worrry kids. Europe is in a worse economic crisis (of its own--nothing to do with the US one), China is facing slow downs and therefore instability and has a demographically ageing population, oil producers are bankrrupt (outside of the Emirates, Kuwait and Saudi Arabia) and Japan has been in a recession for many years now with an ageing population and a national debt of 180% of GDP. The Saudis, China (1.9 Trillion) and Japan (1 Trillion) hold massive amounts of USD reserves and don't want the USD to tumble either. So while everyone will deteriorate, the US with stable fundamentals, massive country with excellent infrastructure, increasing population, safe geopolitics and command and control of the seas and air will continue to have the No 1 economy.

Meanwhile China has lost it's appeal to the WTO over car part import tariffs. Looks like things will get even tougher for that favourite darling of all US-haters, China.
http://www.business-standard.com/in...o-gainwtos-ruling-against-china/01/01/343596/

Will the US bring its trade and budget defecits into line? yes/no

If No => Crash and Burn

It happened to Rome, it happened to the British Empire. It will happen to the US empire, too.

 

[KillerX]

Will the US bring its trade and budget defecits into line? yes/no

If No => Crash and Burn

It happened to Rome, it happened to the British Empire. It will happen to the US empire, too.

The world is a very different place it was back then, countries arent as independant as back then. We are a global economy. If the US "Crashes and Burns" the whole world will go the same way. Read again what was said about japan and china holding large amounts of US currency. If the world leader goes, the world goes.

 

[Bule]

How they missed great SA inflation combat approach? Leave interest rate and employment go Zim way and economy will just magically grow.

 

[Xarog]

The world is a very different place it was back then, countries arent as independant as back then. We are a global economy. If the US "Crashes and Burns" the whole world will go the same way. Read again what was said about japan and china holding large amounts of US currency. If the world leader goes, the world goes.

When Rome crashed it caused the Dark Ages, followed by a good 800 years before things started to pick back up on a proper pace in the known world.

 

[krycor]

I would like to know how much US $ reserves other countries really have.. reason is simple, people in banking knew the dollar was weaking and with e.g. china bailing out other countries you have to question how much they still have. I'm sure they trying to do it quietly tho, first one to do so openly causes everyone to crash. But yah, i will lmao if the US can't afford military size and the reserve currency is changed. I think the meeting on reserve currency is next month

 

[Syndyre]

You are assuming the US will deteriorate while everyone else will grow.
Look at China:



http://www.iht.com/articles/2007/03/20/news/china.php

Do you think a country with 33% of its population in old age homes can grow its economy or remain competitive all the while its chief industries have been heavily subsidised and terribly inefficient?

You said 'relatively' --- relatively to who?
India?
South America?
Africa?

Japan and Europe are in a similar situation to China.

I think China will find itself coming up against constraints relatively soon, as it is already. They can't keep on growing how they have been. I don't dispute the US will remain the most powerful player for a long time but their economy as a % of global GDP will shrink, through a combination of probably India, China, maybe South America etc.

I would like to know how much US $ reserves other countries really have.. reason is simple, people in banking knew the dollar was weaking and with e.g. china bailing out other countries you have to question how much they still have. I'm sure they trying to do it quietly tho, first one to do so openly causes everyone to crash. But yah, i will lmao if the US can't afford military size and the reserve currency is changed. I think the meeting on reserve currency is next month

China has over a trillion in US$ denominated assets, mostly treasury bills. The Middle Eastern countries also have quite a bit. That's why the apocalyptic scenario of China selling its dollar reserves is unlikely, they've got too much to lose, especially since the US is their biggest export market. There's no meeting on the reserve currency, its not an official reserve currency anymore, Bretton Woods is dead, its just remained the de facto world reserve currency.

 

[krycor]

well lately they've been loaning countries money.. surely they won't be silly enough to hang on to the dollars when trading is expected to decrease.

 

[Syndyre]

well lately they've been loaning countries money.. surely they won't be silly enough to hang on to the dollars when trading is expected to decrease.

Who, the Chinese? The problem is they own so many dollars that if they try and sell them their value will plummet. Also, they keep their own currency weak relative to the dollar to boost exports, selling dollars would just cause dollar depreciation and make their exports more expensive, which is the last thing they need now.

 

[Kokop]

OH China well over 1.2 trillion. They need to buy these to get US to buy their goods.

Japan, Over a trillion. Can some one type that out for me, I can't get that figure right in digits with my small brain. They need to buy these to get US to buy.
S Korea, close a Trillion. They need to buy these to get US to buy.
Saudi High hundreds of billions They need to buy these to get US to buy.
Rest of ME close to a Trillion They need to buy these to get US to buy.
Rest of world Over a trillion "does not compute"???

Now the ME has "less" capital to pump into these Tbills with oil going south. Now what?

So in Tbills, who is the first to drop them?

If they do on an open market, the rest will either lose x% of their vlaue, or lose all exports to the US.

They will lose, but loses less than the rest.

Yen v USD in the last 3 days?????

Something is happening.

Who is it?

I have no clue.

But as mentioned before, Tbills going negative, not a good sign as the Fed gobbles them up...

I have no clue as to the rest, just noting current facts.

Shuffling chairs on the Titanic it looks like.

Please take my comments from an absolute ID10T financial anaylsist. Jut what I am seeing.

Love being PROVEN wrong though