Jump to content
House Price Crash Forum
Sign in to follow this  
RichM

Economic Earthquake Can Be Prevented

Recommended Posts

Economic earthquake can be prevented, Times, 24-4-2006

Interesting article, much like the Telegraph piece today.

The crunch time is approaching for the dollar. How true is this paragraph:

Siren voices will continue to urge inaction, with perennial optimists on Wall Street and elsewhere arguing that the risks from imbalances are overdone and that they can unwind over a long stretch in an orderly way. Maybe so. But as Mr. Rajan also observed, "the optimists have to be right every day, while the pessimists need to be right only once".

Share this post


Link to post
Share on other sites

Economic earthquake can be prevented, Times, 24-4-2006

Interesting article, much like the Telegraph piece today.

The crunch time is approaching for the dollar. How true is this paragraph:

Paul Krugman has a very troubling op-ed in tomorrow's (Monday's) NY Times. He talks about how the U.S. deficit is probably much larger than reported. (You have to be a subscriber to read it, so there's no point in posting a link.)

Could be very dark days ahead. Let's hope not.

Share this post


Link to post
Share on other sites

Can't the forces that have prevented this shock happen for so long, continue?

The oriental economic powers want a strong dollar so they can sell America their wares...and because they hold so much dollar-denominated debt...............so the more american public and private debt they buy the stronger their own exports are...The US consumer and Govt are in hock to the Chinese and Japanese but why is this a problem?.........Is the debt-financed trade deficit sustainable indefinitely?..is a huge government debt (aka national debt) held by foreigners a bad thing per se as it's not an imbalance, is it?

Debt goes one way and goods and services the other.

Edited by Michael

Share this post


Link to post
Share on other sites
Guest Riser

You can find the Krugman article here http://economistsview.typepad.com/economistsview/

Dutch_renter

From the article:

Of course, optimists have a comeback: if things are really that bad, why are so many foreign investors still buying U.S. bonds? ... But I have two words for those who place their faith in the judgment of investors...: Nasdaq 5,000.

And who are all these foreign investors stupid enough to buy US debt inthe form of US Bonds ?

You guessed it :lol::lol:

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

United Kingdom

Jan 2005 - $ 101.0 Billion

Feb 2006 - $ 250.8 Billion

Yet another one of Browns black holes :ph34r:

Share this post


Link to post
Share on other sites

Paul Krugman has a very troubling op-ed in tomorrow's (Monday's) NY Times. He talks about how the U.S. deficit is probably much larger than reported. (You have to be a subscriber to read it, so there's no point in posting a link.)

Could be very dark days ahead. Let's hope not.

Let's hope so!!! The darker the better as far as I'm concerned.

When I was dining in Mayfair the other week, I actually sort of prayed, that all these greedy plutocrats, who've basically made their money from Alan Greenspan pumping the world full of paper, are subject to savage asset deflation.

I thought '06 would be the year and for some reason I think we're going to see something significant, short term, ie; next few weeks.

Share this post


Link to post
Share on other sites

From the article:

And who are all these foreign investors stupid enough to buy US debt inthe form of US Bonds ?

You guessed it :lol::lol:

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

United Kingdom

Jan 2005 - $ 101.0 Billion

Feb 2006 - $ 250.8 Billion

Yet another one of Browns black holes :ph34r:

Thats because 40% of our trade is with the US. That means all the trade activity - selling oil and english teapots and dirivatives, accumulates dollars. The BOE ends up with these dollars and invests them in US T bills or other US assets.

As the US gains a greater and greater trading edge, from selling stuff we increasingly buy, from operating systems to computer parts, we end up with more and more dollars. US exports have picked up greatly as the dollar devalued, US industry picked up, and the pound remains strong.

Share this post


Link to post
Share on other sites

Let's hope so!!! The darker the better as far as I'm concerned.

When I was dining in Mayfair the other week, I actually sort of prayed, that all these greedy plutocrats, who've basically made their money from Alan Greenspan pumping the world full of paper, are subject to savage asset deflation.

I thought '06 would be the year and for some reason I think we're going to see something significant, short term, ie; next few weeks.

I have two children who have just finished up their education and are beginning their careers. Even though I would like to see house prices (in England and the U.S.) get back to something sensible (yes, even though it means I will lose significant equity in my current home), I would hate to see a recession--or worse. My children might have a very difficult time finding decent employment. Others who are less well off (most people aren't greedy plutocrats) would suffer as well.

Share this post


Link to post
Share on other sites

Can't the forces that have prevented this shock happen for so long, continue?

The oriental economic powers want a strong dollar so they can sell America their wares...and because they hold so much dollar-denominated debt...............so the more american public and private debt they buy the stronger their own exports are...The US consumer and Govt are in hock to the Chinese and Japanese but why is this a problem?.........Is the debt-financed trade deficit sustainable indefinitely?..is a huge government debt (aka national debt) held by foreigners a bad thing per se as it's not an imbalance, is it?

Debt goes one way and goods and services the other.

Fine. But the Orient (not Leyton) basically holds one giant IOU from the Yanks.

Consider the implications of the fact that the assets/wealth to back that IOU up simply do not exist nor have they ever existed, nor are they likely to ever exist.

Someday, someone is gonna get short-changed. And they aint gonna be very happy about it.

Share this post


Link to post
Share on other sites

Fine. But the Orient (not Leyton) basically holds one giant IOU from the Yanks.

Consider the implications of the fact that the assets/wealth to back that IOU up simply do not exist nor have they ever existed, nor are they likely to ever exist.

Someday, someone is gonna get short-changed. And they aint gonna be very happy about it.

Although that's also the reason why they can't just call in the debt. Better to use the power it gives them to expand their influence in the world steadily, and allow the US to slowly decline as a world power, than to blow it all by demanding assets that don't exist...

Share this post


Link to post
Share on other sites

Although that's also the reason why they can't just call in the debt. Better to use the power it gives them to expand their influence in the world steadily, and allow the US to slowly decline as a world power, than to blow it all by demanding assets that don't exist...

so basically the US is just one huge global bank which issues dollars with no backing.

that makes sense.

it also makes it likely there could be a run on the bank and everyone would demand their dollars at once.

i think war is the only likely outcome of all this mess.

sigh,.

Share this post


Link to post
Share on other sites

The thing I can not understand is why people don’t rush out and buy Japanese yen as we are told it is under valued and that they are being forced to let it float freely so it seems a dead bet that it will shoot up to me.

American has got it coming it’s just than no one dares leave the game and cash there chips in as the guy they are playing has a gun and he’s skin flint

Share this post


Link to post
Share on other sites

so basically the US is just one huge global bank which issues dollars with no backing.

that makes sense.

it also makes it likely there could be a run on the bank and everyone would demand their dollars at once.

That could happen, but I think the slow grind is more likely really. It's in the interests of a few countries to let the US imagine it's the dominant superpower for a while longer. Apart from anything else, the US is extremely useful as a consumer market.

Share this post


Link to post
Share on other sites

That could happen, but I think the slow grind is more likely really. It's in the interests of a few countries to let the US imagine it's the dominant superpower for a while longer. Apart from anything else, the US is extremely useful as a consumer market.

there is some merit in that view, but we must be mindful of the delicacy of the situation. I don't think that the current balances are that robust, and an energy crisis could be enough to fuel the current urges toward protectionism... with (not) hilarious 1920/30s style effects!

Share this post


Link to post
Share on other sites

I have two children who have just finished up their education and are beginning their careers. Even though I would like to see house prices (in England and the U.S.) get back to something sensible (yes, even though it means I will lose significant equity in my current home), I would hate to see a recession--or worse. My children might have a very difficult time finding decent employment. Others who are less well off (most people aren't greedy plutocrats) would suffer as well.

If there's one thing this 'decade od decadance' has taught me, it's that it's every man for himself and the devil take the hindmost. Sorry to be heartless. I will feel the same amount sympathy for mr+mrs average who live in a semi in Maidenhead who've lived beyond their means as I will for the slothful international rich in Mayfair, when asset prices contract - none!

As for your children - there are many opportunities in a recession, contrary to perceived opinion.

Share this post


Link to post
Share on other sites

If there's one thing this 'decade od decadance' has taught me, it's that it's every man for himself and the devil take the hindmost. Sorry to be heartless. I will feel the same amount sympathy for mr+mrs average who live in a semi in Maidenhead who've lived beyond their means as I will for the slothful international rich in Mayfair, when asset prices contract - none!

As for your children - there are many opportunities in a recession, contrary to perceived opinion.

Yes, there are opportunities in a recession, but they're harder to come by.

I think you'll find that a lot of Mr. and Mrs. Averages aren't big spenders. They're just trying to keep their head above water. Here in the States, most bankruptcies are due to unexpected health costs.

Share this post


Link to post
Share on other sites

As the US gains a greater and greater trading edge, from selling stuff we increasingly buy, from operating systems to computer parts, we end up with more and more dollars.

This is the wrong way round; buying US exports is a *sink* for expatriate dollars.

frugalista

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.