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POPSJapan Abandons America During the run-up to the election, Hatoyama’s finance minister told the bbc he was worried about the future value of the dollar, and that if his party were elected in the upcoming national elections, it would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen. Japan is the world’s second-largest economy. It is also America’s second-most-important creditor. The U.S. government owes Japan over $724 billion! The only nation America owes more money to is China ($800 billion). The U.S. also imports $140 billion worth of goods from Japan each year. If Japan were to follow through with its threat to only lend in yen, the dollar would probably fall hard. What would that mean? America gets more expensive consumer goods, higher unemployment, and currency inflation. If other nations like China follow suit, we would be looking at a currency crisis—Zimbabwe-style.
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POPSThe USS America is Sinking Japan is the world’s second-largest economy. It is also America’s second-most-important creditor. The U.S. government owes Japan over $724 billion! The only nation America owes more money to is China ($800 billion). The U.S. also imports $140 billion worth of goods from Japan each year. If Japan were to follow through with its threat to only lend in yen, the dollar would probably fall hard. What would that mean? America gets more expensive consumer goods, higher unemployment, and currency inflation. If other nations like China follow suit, we would be looking at a currency crisis—Zimbabwe-style. America’s ship of state is sinking. Japan’s lifeboat has already left.
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POPSWhy Most Investors Buy High And Sell Low The old stock market saying “buy low and sell high” is the opposite of what most individual investors do. While investors obviously want to see increasing returns, most inadvertently end up “buying high and selling low” instead.
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POPSBernanke warns on deficit Interpretation: The Fed passes the toxic debt ball back to the government, and washes its hands. The interesting thing is that if government is stuck with all the debt, the only way it can do this is to radically curtail its own activities. Libertarians and anarchists (and other advocates of local self-govenment) could, ironically, be the winners. On the other hand, it could be the banks and the multinationals.
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POPSThe End of the American Economic Era?
Right now, the United States has responded to a lack of demand for its Treasuries through a questionable and disturbing method: we're buying our own debt. That allows the yields to remain low, but buying our own debt is somewhat akin to creating your own credit card. Eventually, you have to acknowledge that the money you create on the books never really existed, unless the United States plans to simply print money to pay off all the bonds. That would create a level of inflation not seen in the West since the Weimar Republic, and will effectively force the rest of the world to avoid U.S. currency and investments as unsound. It would, for the first time in decades, put the United States on the financial sideline. Who would take over as the leading economic power? What kind of world would global dominance by China, India, or Russia bring, assuming any of these could take that role? How about a coalition of oil producers like OPEC, who have the means to fund it? Scary.
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POPSChinastill buying China's official foreign exchange manager is still buying record amounts of U.S. government bonds...
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POPSObama is taking the US economy down the disastrous UK road "What should unnerve Americans is that Obama's economic policies are basically the same as Brown's: massive spending, massive borrowing and massive monetary expansion. This is what these people and their economic advisors call sound economics. The classical economists must be spinning in their graves. " Obama's rhetoric and policies have been the most hostile to business since the Roosevelt administration of the 1930s.
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POPSThe latest threat to our economy - swine flu. It's odd to be posting a clip about swine flu, but i thought it was intersting that tonight there are a number of articles around the web speculating that the outbreak of swine flu could pose a material threat to the ecomic recovery. If this gets to the point that it's affecting the economy, that would imply some very ominions health consequences to come.
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POPSTIC Flows--OUCH! The prime implications of the Trade Balance deals with a comparison to the Treasury International Capital Flows as both are measures of capital inflow or outflow. That balance deals with the willingness of non US entities to finance the demands of the USA. The Trade Balance deals with the mechanics of international trade as a positive inflow of capital in terms of export earnings or out flow as a product of import dependency.
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