Cid_Yama wrote:<b>Asia Rethinks American Investments Amid Market Upheaval</b>
Tremors from Wall Street are rattling Asian confidence, leading many investors to question the wisdom of being invested in the United States to the tune of trillions of dollars.
Asian investors were starting to show hesitation even before the financial earthquake of the last week. Now, a wariness toward the United States is setting in that is unprecedented in recent memory, reaching from central banks to industrial corporations, from hedge funds to the individuals who lined up here to withdraw money from the American International Group on Wednesday.
Asia’s savings have, in essence, bankrolled American spending for decades, and an Asian loss of confidence in American financial institutions and assets would have dire consequences for both the United States government and American taxpayers.
Little-noticed data released by the Treasury Department on Tuesday showed that a sharp shift in international capital movements began in July. Private investors pulled a net $92.9 billion out of the United States, after putting $46.8 billion into American securities in June.
Central banks, mainly Asian, did continue buying American securities in July. But they did so at a slower pace than usual.
seahorse2 wrote:There used to be some long debates about how long the dollar could remain the world's reserve currency. They were interesting, often heated debates, but informative nonetheless.
I believe I speak for most people to say that after years of debating PO and a whole host of other issues, that the events of the last 7 days have done more to damage the world's belief in the "full faith and credit" of the United States than all the other issues we ever debated that could lead to a devaluation of the dollar.
As one US trader said on t.v. last night, he was not investing at all anymore. When there are no rules, when new rules are promulgated in the dark of the night without any notice or comment, only to be announced the next morning, its a fools game. If this trader who is a regular on prime time US MSNBC has lost all faith, I can only imagine every trader in the world feels the same.
Ultimately, people have invested in the US because they believed in the stability of its economy and the stability of the rules of the game, capitalism, with due process. If anything leads to a death spiral of the dollar, it will be more like this week which rock the very foundations of why people have believed in the US is a safe place to take risks.
seahorse2 wrote:There used to be some long debates about how long the dollar could remain the world's reserve currency. They were interesting, often heated debates, but informative nonetheless.
I believe I speak for most people to say that after years of debating PO and a whole host of other issues, that the events of the last 7 days have done more to damage the world's belief in the "full faith and credit" of the United States than all the other issues we ever debated that could lead to a devaluation of the dollar.
As one US trader said on t.v. last night, he was not investing at all anymore. When there are no rules, when new rules are promulgated in the dark of the night without any notice or comment, only to be announced the next morning, its a fools game. If this trader who is a regular on prime time US MSNBC has lost all faith, I can only imagine every trader in the world feels the same.
Ultimately, people have invested in the US because they believed in the stability of its economy and the stability of the rules of the game, capitalism, with due process. If anything leads to a death spiral of the dollar, it will be more like this week which rock the very foundations of why people have believed in the US is a safe place to take risks.
"While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences. The U.S. dollar will be shattered beyond repair. The government simply has no means to make good on the trillions of new liabilities. Interestingly, while both Paulson and President Bush acknowledge that the plan will put "significant amounts of taxpayer dollars on the line," they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.
The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye. Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institution, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value. Is the trade-off really worth it? Washington thinks so.
Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge. However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets. This get-out-of-jail free card will likely scare them straight. The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede."
messageinabottle wrote:
I agree but why did da market go up today? So people DID fall for it, and isn't PERSPECTION everything???
bkwillia wrote:Nothing has changed. The feds just bought some more time. There is money to be made from a falling dollar, if you like making money...
DantesPeak wrote:Will the US eventually choose to raise interest rates while liquidating trillions $ in assets from F & F - and the new RTC like federal entity - or just let the dollar fall in value?
Do we live on a bubble? Is it possible for the heavily indebted American economy to collapse and take all of us down in a free fall with it? Have the days of the dollar been counted? Is it really unimaginable that we will see the time of the Great Depression repeating itself?
VPRO Backlight and Dutch national newspaper NRC Handelsblad present this 'what if' scenario. What if the dollar collapses? Fiction meets facts in this 24 hour scenario. At 9AM a Singapore trader is ordered to sell a large amount of dollars, which sends off the enormous downfall of the dollar. This film shows the results for the world economy every following hour. It ends in Amsterdam, where the only currency accepted by a taxi driver is sigarettes...
History seems to have caught up with this 2005 film, though in slow-motion...
Includes interview with analist Stephen Roach, Andy Xie, Maarten Schinkel, Cees Maas, Rob de Wijk and Kees Vendrik.
Koyaanisqatsi wrote:Who is it going to be, and when?
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