it just will take longer for the lefties to kill the US off. The move heralds the first direct public sector layoffs in more than three years of painful austerity, which have already cost nearly 1 million private sector jobs. <http://news.yahoo.com/greece-close-...-163449314.html;_ylt=A2KJ2UbwT75RqFIAFwXQtDMD> note it is the private sector that bears the pain for failed economic policies of government. it is only as last resort that public workers are laid off instead of being laid off first, thereby restoring the viability of the producing sector of society, the private sector. it happened in greece. it is happening in argentina. in argentina the middle class has had to cut the consumption of meat as the becomes poorer because the gov't is trying to devalue its way to prosperity. the US with its QE, devaluing the currency, is destroying the country. (you will start to hear the usual bellowing that the US is different. it is not it will just take more to sink just like the titanic. don't believe the noises that the US has reserve currency status which will save them. once the run on the dollar escalates inflation will go through the roof just like in these 3rd rate countries. here is the counter argument by the leftie ann huffington who is worth over 300million while laughing at the mass pf americans. http://news.yahoo.com/greece-close-...-163449314.html;_ylt=A2KJ2UbwT75RqFIAFwXQtDMD)
I remain in steadfast agreement. The outlook has not changed, nor will change in the short-term. It all comes down to the deficit and qe. Deficit plus non treasury qe x fiscal multiplier gives the net shortfall in gdp. Bond vigilantes sell off at around the 110-130 debt to gdp level. US is three to four years out from a ruinous dollar collapse. Few traders, let alone economists on this site, understand the relationship between the deficit and gdp. Italy and spain wernt even near 130 percent, but the market smelled blood in the water. Kyle bass and others thing japan is next.
Yes, I guess you could say we're lucky that Japan is providing a test run for us. If they blow up, then we're going to feel a lot of pain too. Maybe not as much as them because our demographics are more favorable, but it won't be pretty. If they're still muddling along 5 years from now, then all of the inflationists got it wrong and Krugman was right. We will be truly living in bizaro world if Krugman turns out to be correct after all
Roubini coined it with the distinction between net creditor and net debtor countries. Japan is a net creditor (total foreign assets held by the BOJ are far greater than JGB's held by foreigners (5% of total outstanding)). IOW, if foreigners dumped JBG's and sold their yen assets, the BOJ has many multiples of that in foreign denominated assets (and could sell, to prop up the yen). Which explains why Japan got as far as she did. Italy, Spain, Portugal, Greece, US. All the same. US Fed and Treasury have something like a few hundred billion in foreign denominated assets (including gold), with 5-6 trillion in UST's held by foreigners. IOW, when foreigners sell their treasuries and dump the dollar, the FED and Treasury have nowhere near enough "dry powder" (foreign denominated assets) to sell, and use to shore up a dollar collapse. What's more likely to happen is a foreign exodus from treasuries, but still long dollars. UST yields go to >8+%, stock and economy crashes, FED prints and buys treasuries to stabilize interest rates/economy > investors dump dollars = same outcome. Dollar collapse. Odd, but that whole chain could happen within an hour. Another way to look at it - consider the interest cost on the US national debt if the FED doesn't intervene during a UST exodus. Half the national debt rolls over on a 5 year basis. If rates are left at 8-9% for any period of time over 2 years, debt service cost goes parabolic and eats up over like half the discretionary budget, within a matter of years. All roads lead to ruin, at this point. My 2 cents.
Got nothing to do with leftie or rightie. Lefties whine about the righties spending trillions in useless wars, righties whine about lefties and their unions bankrupting municipalities. Problem is we got way too many whining morally corrupt assholes in all spheres of life and not enough moral upright people. The problem is not a greek problem either. It's a problem in entire western nations. No good thugs from both sides raping the middle. Child molesting priest types running the show.
So the Dollar is going to collapse in an hour and the world economy will follow it within to, buy Gold!!
The difference between America and every other country is not that the US dollar is a reserve currency but the fact that the US has the POWER behind the dollar. I mean, if the US doesnt get what it wants when it asks nicely, it will get it by force. If any country demands payment on the bonds they hold, the US could send a couple of B-2s out, make a little show and shut everyone up The bully on the block gets his way, one way or another, and as long as the bully keeps everyone else from getting strong, no bigger bully will come along.
The US fiscal situation has little to nothing in common with Greece nor Argentina. These attempts comparing apples to oranges are cringe worthy at best.