http://seekingalpha.com/article/130590-observations-on-the-total-u-s-debt?source=feed The break out: $9.7 Trillion in bailouts $11 Trillion in national debt $17 Trillion in corporate/financial debt, and $13.8 Trillion in household debt $1 Trillion in credit card debt $10.5 Trillion in mortgages $52 Trillion in social security/medicare obligations In the context of the consumer balance sheet: $20.5 Trillion of residential real estate $8.8 Trillion of equities $7.7 Trillion of deposits and cash $4.1 Trillion of consumer durable goods $1.6 Trillion of corporate bonds $960 Billion of municipal securities $920 Billion of agency paper $273 Billion of treasury notes and bonds
The irony is that at least 65% of Americans don't have good enough credit to borrow $1K at better than 10%. How many US corporations can borrow at 3.5% for 30 years? Who backs the US treasury that is currently able to get 30 year money for 3.5%? US citizens and corporations. I know that is an oversimplification and that the US has real assets but there is still a massive disconnect here. Either the dollar has to fall, or rates have to rise, or both, and significantly so. This guy called the deleveraging led crash back in the summer of 2007 and he makes a good point about the USD. http://www.gold-eagle.com/editorials_08/laird040209.html
of course will the USD have to depreciate, significantly. Question is when...My take is that while global markets and assets remain highly correlated and while the whole global economy is in this mess the USD will not go a whole lot lower. What currently supports the USD is the fact that there are not a whole lot more attractive investments outside the US. I do believe, however, that this will change and that with China some other other economies will "decouple" from the US. Chinese dependence on the American consumer has already dramatically broken down and this will ultimately benefit China. The same can be observed between the Australian and Japanese markets relative to the US. American consumers are looking at some serious adjustments in their lifestyles and expected wealth generation. Other nations are in that regards far ahead the curve. But for now I dont see a USD collabse unless spreads in above mentioned fundamentals start to widen.
Agree, very dangerous to short the USD here. The moment this bear market rally is over and we head back down the USD strengthens and sharply. As for treasuries, there is much manipulation/buying of US treasuries by the Fed and central banks trying to support their currencies that when they run out of steam look out below, again dangerous to get ahead of the market on this trade too.
We've basically turned into France overnight. France calls them "national champions" and we call them "systemically important" - a.k.a "too big to fail". The net result is higher taxes, growing national deficit, higher costs due to reduced competition, capital flight, lower FDI, inflation and either a falling or stagnating GDP. This is what government has managed to accomplish in less than one year. I just can't understand why anyone objects to more government involvement in the economy. Geez.