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Prude

Seems I Had This Wrong ..

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Seems that we are proping up the US debt mountain.

barchartmar06_1_.gif

Chart from this article Who owns the US Debt

The article (refering the 'Foreigners') rather smugly ends with;

"In that environment, it’s tough to figure out who we’re supposed to be scared of, isn’t it? I gave up a long time ago; I’m just grateful they’re helping (indirectly) to fund our economy’s growth, and helping (indirectly) to keep our tax rates lower than they’d otherwise have to be to keep our debt burden (debt-to-GDP ratio) from growing. (Thank you, foreigners! Maybe you should consider immigrating...)"

So just why have we been buying up so much US debt in recent times? Is it a good investment when we know that the US are printing as fast as they can? Are we mugs then? Don't we have enough debt of our own to fund?

The Japanese by contrast are reducing their US debt holdings.

Anyone else suprised by this?

post-3252-1153129391_thumb.jpg

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Seems that we are proping up the US debt mountain.

barchartmar06_1_.gif

Chart from this article Who owns the US Debt

The article (refering the 'Foreigners') rather smugly ends with;

"In that environment, it’s tough to figure out who we’re supposed to be scared of, isn’t it? I gave up a long time ago; I’m just grateful they’re helping (indirectly) to fund our economy’s growth, and helping (indirectly) to keep our tax rates lower than they’d otherwise have to be to keep our debt burden (debt-to-GDP ratio) from growing. (Thank you, foreigners! Maybe you should consider immigrating...)"

So just why have we been buying up so much US debt in recent times? Is it a good investment when we know that the US are printing as fast as they can? Are we mugs then? Don't we have enough debt of our own to fund?

The Japanese by contrast are reducing their US debt holdings.

Anyone else suprised by this?

I'm not totally comfortable with my grip on money supply econmics, but this situation looks simpler unless I am missing something.

US interest rates are the highest of the safe world economies so offer a safe investment if the debt we are buying is T-Bonds. Any talk of the US going bankrupt is just stupid. Then on the other hand our government can service its own debts for less than the US T-Bonds should be returning, so we should have a positive cashflow on these investments, especially if we are borrowing at 'near 0' rates from Japan!

AFP

ps. If I've completely misunderstood this someone please educate me.

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Any talk of the US going bankrupt is just stupid.

Didn't someone at the Fed just say that America _is_ bankrupt?

In reality it's just Blair being Bush's poodle again, while most of the rest of the world's banks are dumping dollars.

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Didn't someone at the Fed just say that America _is_ bankrupt?

In reality it's just Blair being Bush's poodle again, while most of the rest of the world's banks are dumping dollars.

If America sneezes Europe catches cold. The US economy is moving toward recession as they enjoy a sharp HPC at the same time as IR are rising to combat oil-induced inflation. The UK is running a deficit in both exports and government spending (the evil twins). Our personal debt is slightly higher than the US per capita (1.2 Trillion pounds compared with 11.1 trillion US $). The pound is not going to remain resilient for long and perhaps a larger reserve in US $ will cushion the blow if sterling loses its lustre in the eyes of those who once thought Gordon had created a miracle economy.

In times of war the flight to safety seems to be toward the US $. The Russian ruble is not going to attract much money except from a few loyal Arab nations and then, probably just a few token amounts.

Pound off 2cents today:

1 U.K. £ =

1 1.8201

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In times of war the flight to safety seems to be toward the US $.

That may have been true for the last fifty years, but it's hardly going to be true when most of the world opposes America's actions. Do you really think that the Chinese or Russians, say, will be buying US bonds if Bush invades Iran?

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RB

I'll go for euro's any day but you only talk about $ and £.

PetroDollars are coming to an end and then the USA is in big trouble and thats why they are upset with Iran because Iran is selling oil in euro's

OPEC is buying lot's of american debt i see, quick better put the price of oil up

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Didn't someone at the Fed just say that America _is_ bankrupt?

In reality it's just Blair being Bush's poodle again, while most of the rest of the world's banks are dumping dollars.

Looking at the figures in the chart I have to agree with this - no other countries seem anywhere near as enthusiast as us about loading up with US Debt.

I'd understood from this forum amongst others that the CHinese had the most to gain by keeping the US afloat and so were using their huge surplus to continually bail the US out. The figures show though that whilst the Chinese are putting billions in we put nearly 6x as much up in the 6 months to March 06! So who has the most to lose? GB does. Maybe he thinks he can hold his finger in the dam for long enough.

Edited by Prude

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Is it the UK government buying US debt?

I would have thought most of it was investors in the City of London, possibly as part of a carry trade given the high rates available on Us debt now.

Not sure was hoping people on here could shed more light on it. $83bn is a hell of a a big gamble in 6mths given the precarious state of the dollar exchange rate.

If I'm not mistaken during this 6 mth period and since US bonds have continued to fall in price meaning that you wouldn't get your $83bn back if you sold at present.

Correct? If so not very clever.

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Wouldnt be surprised if there is an agreement between the US and the UK that makes sure that the UK funds the US deficits by buying US debt.

The US seems to buy most of their bonds themselves, or through their friends the UK.

Monetization of debt, same as printing money. First create money electronically out of nothing, then buy their own bonds. The ultimate sin. Maybe they just send the money to the UK and let the BOE buy the bonds, so that it looks like there is real demand for their bonds.

Its the same when you hear that private investors step up to by bonds whenever central banks don't buy enough bonds. It the US government buying thier own debt through carribean banks <_<

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That may have been true for the last fifty years, but it's hardly going to be true when most of the world opposes America's actions. Do you really think that the Chinese or Russians, say, will be buying US bonds if Bush invades Iran?

Do you think the Chinese will stop buying US bonds causing the dollar to slide and the bonds they have already bought to be worth less?

It's Catch 22 for holders of American debt. Keep buying it or risk devaluing what you have already lent.

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  • 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%



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