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Euro Bond

This is really hypocritical. If Spain is being given this treatment, then the same should be given to the US/UK.

As DD was pointing out, it's power politics, not some "laws of economics" concocted by some economist acting as an apologist for the status quo.
 
You have hit the nail on tbe head! There are many myths in circulation at the moment.

Oh sure, the myth of ''too much debt'' , haha, are you guys serious?

We say ''too much debt'' because there isn't endless savings around the world.
EDIT: Also depends on the countries ability to repay the debt + we know for a fact that when countries reach 100% Debt/GDP ratio, they have a hard time paying it back.

In order for the US to go deeper into debt, they borrow from the Chinese. And where does the chinese governement gets the money to lend? From it's savings...but guess what, savings are LIMITED!

So, unless, you, BBW and Rishad have an exclusive info about a magical pot with endless money coming out of it (don't tell me a printing press :D) hiding in area 51, that defies all economic laws, then I think you guys are dead wrong. :D
 
In order for the US to go deeper into debt, they borrow from the Chinese. And where does the chinese governement gets the money to lend? From it's savings...but guess what, savings are LIMITED!

I feel embarrassed pointing out what more or less everyone here knows: even if the Chinese wanted to (and they don't), they can't finance US deficits -- they're too big. "Quantitative easing" is a euphemism for the Fed electronically creating money and using the money to buy its own debt. This is a big chunk of the reason for the flight to gold and silver. And the Chinese have been complaining about this, rightly fearing this will lower the purchasing power of their own dollar holdings. The point is the US can and is increasing its debt arbitrarily. But the rules it applies to itself ae not what it approves of in other countries: for them, the IMF's prescription of savage austerity measures. Different strokes for different folks ....
 
I feel embarrassed pointing out what more or less everyone here knows: even if the Chinese wanted to (and they don't), they can't finance US deficits -- they're too big. "Quantitative easing" is a euphemism for the Fed electronically creating money and using the money to buy its own debt. This is a big chunk of the reason for the flight to gold and silver. And the Chinese have been complaining about this, rightly fearing this will lower the purchasing power of their own dollar holdings. The point is the US can and is increasing its debt arbitrarily. But the rules it applies to itself ae not what it approves of in other countries: for them, the IMF's prescription of savage austerity measures. Different strokes for different folks ....

lol but see, the problem is that the FED cain't monetize the debt forever ! The inflation is already showing its ugly head and it will only get worse.

And as for China, I only used it as an example to show that countries don't have an unlimited pool of savings = they cain't lend forever.

Also, 70% of U.S. bonds mature in 5 years, that looks like an ARM to me.

In other words, unless you guys cut spending with a chainsaw, it doesn't look good, at all.

EDIT: and you take it for granted that the USD will remain the world's reserve currency. That's a mistake in my opinion.
 
The USD isn't the world's reserve currency imo. However, all of America's debts are in USD, which means it ultimately controls its own destiny.
 
However, all of America's debts are in USD, which means it ultimately controls its own destiny.

Sure, print to repay the debt.

What about americans though? All they have is USD! So yea, wipe out all the life savings of all americans to repay the debt, lol.....Seems like you guys studied Econ. at the Zimbabwe School of Economics :D
 
lol but see, the problem is that the FED cain't monetize the debt forever ! The inflation is already showing its ugly head and it will only get worse.

And as for China, I only used it as an example to show that countries don't have an unlimited pool of savings = they cain't lend forever.

Japan has been doing that for like 15-20 years - it has probably the lowest bond yields in the world. Also, ironically, US bond yields are the lowest levels when its debt/GDP ratio is at one of the highest levels in history ( In 1980's it was like 30% Debt/GDP). Inflation is a joke. Today's inflation is nowhere near to what it was in 1970's and early 80's. Also, the crash in the US dollar from an index level of 160 to 70 was much worse and much faster than the fall from 120 to 70 (2008) in 11 years.

The fact is that Fed can control the lower end by keeping rates low, and the longer maturities by simply printing the money.

The reason fed can print money and can get away is because US is by far the largest consumer in the world ( sorry all BRICS combined consumer just about 50% of what US does). The fact is that these countries will always be drowned in the race of hoarding as many USD in forex reserves ( as a result of past crises experienced by them).

P.S In the Great depression and the following period (after WW II) US debt/Gdp rose to some 140%, but US borrowing rates were some of the lowest in its history.
 
I think that most of the recent excesses from the financial world must and will be reduced by more stringent regulation. Resigning sovereignty to plutocrats is not where mature democracies were intended to go.

As citizens (not numbers or productivity units), we are just fighting our war to keep the status gained with many difficulties in the last two centuries. Poorer maybe, not slaves again.

This bullying farce commanding austerity to entire countries cannot go on for long: sooner or later, some leading politician will just tell that it is a colossal joke, as it is. And I think our Sultan Silvio, the ruined trickster of Europe, is very tempted to do so in a flagrant way.
 
I think that most of the recent excesses from the financial world must and will be reduced by more stringent regulation. Resigning sovereignty to plutocrats is not where mature democracies were intended to go.

Regulation by whom? "Plutocracy" means the rich pull the political strings. That's why neither the USA nor Europe has seen the regulatory framework change in the last three or four years. The attempt has been, rather, to prop it up at the expense of ordinary people. And I'd argue that the logical end result of modern Western states has been plutocracy: that's part of the reason it's so hard to break out of the bind.

As citizens (not numbers or productivity units), we are just fighting our war to keep the status gained with many difficulties in the last two centuries. Poorer maybe, not slaves again.

We are debt slaves: again, that follows from plutocracy. And (de facto) slavery and (nominal) citizenship are at odd with each other. The job of Western politicians is to square the circle: to convince us we are free citizens while ignoring the economic realities that consign the majority of us to chattel status.

This bullying farce commanding austerity to entire countries cannot go on for long: sooner or later, some leading politician will just tell that it is a colossal joke, as it is. And I think our Sultan Silvio, the ruined trickster of Europe, is very tempted to do so in a flagrant way.

Maybe.
 
lol but see, the problem is that the FED cain't monetize the debt forever ! The inflation is already showing its ugly head and it will only get worse.

Yes, but the US has no alternative but to monetise the debt. Even commentators like Pat Buchanan have been saying that the US can no longer afford its system of perpetual war and its 800+ overseas bases. Empire is bankrupting the USA, but so great is the political and institutional inertia and ossification, headed by this pitiful excuse for a president and the bought whores who constitute Congress, that nothing changes.

EDIT: and you take it for granted that the USD will remain the world's reserve currency. That's a mistake in my opinion.

No, not assuming it. Incidentally, here is an interesting interview with John Williams of Shadowstats, where he argues present inflation in the US is 11% and that a catastrophe is looming for the USD.
 
Daniel, just because a single currency is desirable does not mean the cost of it is worth the benefits.

ItalUK, giving power to Eurocrats is scary, so is dentistry or cancer surgery.

I must say I have no time at all for the "small countries will be crushed" idea.
Any number of smaller economies are doing well, Switzerland, Singapore, South Korea, etc.
I see no particular correlation, positive or negative between size of currency bloc and economic growth, except of course that successful economies become bigger. China grows quite nicely in a globalised world with an economy about the size of Germany, Japan which is not all that much smaller doesn't really grow at all. Euro zone growth before the crisis was pretty poor, it's now held up by the Germans.

I think that rishab may be referring to Euro zone countries, not the EU. Britain is not a member of the Euro and although its reserves are quite a lot lower than Japan, add to the EU total considerably.

Also, I don't see large reserves as a positive thing.
Stability is worth paying for but Japan's problem for most of the last 10-15 years have been too much stability, not too little.

Also currency reserves let governments play with exchange rates, rarely does this make a country richer, its just too tempting to play with.
 
Daniel, just because a single currency is desirable does not mean the cost of it is worth the benefits.

ItalUK, giving power to Eurocrats is scary, so is dentistry or cancer surgery.

Can you elaborate? I don't get the dentistry part..

A positive effect of 'giving power to the Eurocrats' as opposed to national governments is that they broke down cartels and monopolies and made the markets more open. That's what I have seen in the last 35 years on the mainland.

In my opinion, the Euro is not the issue. It has become an ideological discussion and not productive. It is the best for Europe to have the Euro. Going back to punts and lire is not on. BTW I pay in Euro when I shop in Newry in county Down.

If you see my 2006 thread "The Housing Market" on Wilmott shows what the real isssues were. Unfortunately, my fears became reality.
 
There are many myths in circulation at the moment.

This is just in:

''Former New York mayor Rudy Giuliani says the United States has let its economy and federal budget get so out of control that it has become a national security problem that could compromise the safety of the country.''

Daniel or BBW, could you please contact Giuliani ASAP and explain to him that all this ''out of control federal buget'' is all a ''myth'' ?

:D
 

This is like pegging yourself to the Titanic in the hope of a stable relationship.

If weakning your currency help your exports, why aren't the US exports booming? the USD lost alot of value in the past 5 years and the U.S. is having historic trade deficits.

Now, this is a REAL myth: ''Weakning your currency is good for your economy''.
 
If weakening your currency help your exports, why aren't the US exports booming? the USD lost alot of value in the past 5 years and the U.S. is having historic trade deficits.

Now, this is a REAL myth: ''Weakning your currency is good for your economy''.

I think that we should first be clear that booming exports does NOT/IS NOT equivalent to trade surplus. The imports could rise even faster (case in point India).

Regarding US trade deficit:

It's just that Chinese Yuan is also depreciating at almost the same rate as the USD (An appreciation of 7% in last 5 years is hardly something to talk about; the huge buildup in Chinese forex reserves is testimony to the fact that how the Chinese manipulate exchange rate). Plus Chinese wages are much lesser than those of the Americans. If you read the trade statistics, you'll find that 80% of the US trade deficit is because of China.
 
If you can look past all the doomsday fetishism, there's definitely a grain of truth in there.

But then again, doomsday fetishism is what keeps most of these threads alive.

I'm not sure that's the right term for what Rasmus is saying: I think he's pointing out the opposed interests of finance capital and just about everyone else. The volatility and the bleak economic outlook are both stemming from the intransigence of finance capital and its insistence that everyone else pick up the tab. Within the current status quo, there are no solutions: you can call that "doomsday fetishism," if you insist.

I don't read the American press so I don't how much coverage was given to the 3m Italians who went on strike yesterday, opposing Berlusconi's austerity budget. The battle lines have been drawn.
 
Rudy Giuliani is a one hit wonder, a mediocre mayor of NY who was dimwitted enough to allow a major disaster management centre to be in a known major terrorist target and oversaw plans for disasters that were tragically inept.
His one achievement is not sitting in a corner crying after 9/11, but let us not confuse his whinging about "national security" as anything other than the one hit wonder band re-releasing their one hit single remixed with a new bass line.
 
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