Posted on 07/15/2008 7:39:29 PM PDT by DeaconBenjamin
Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.
"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."
(Excerpt) Read more at telegraph.co.uk ...
"Global Insight is the world's largest economics organization, serving over 3800 clients in industry, finance and government world-wide, . . ."
yitbos
I wonder where all those a$$holes went that were preaching about the stupidity of our gold. I am currently sitting on a 1,000 percent profit in my leveraged gold fund. I keep trying to unload it, but it keeps going up higher than I can reach.
The stock has been slammed as oil has gone up, up, up.
AMR not be quite at bottom (earnings will be announced tomorrow so it may take a dive) so I reserved more funds to double down and buy more if I need to...but it's not far from bottom. Some of these stocks are at fire sale prices.
The increasing hysteria, high volume, and media shouting over the last few days signals we are close to bottom.
Tralala, let the good times roll! OK, I'll blow you off too. If that's your idea of defending what you said, no one need spend any time considering anything you have to say. |
It's frightful to think of it. If the confidence game goes completely sour, if the world doesn't want US bonds and US dollars, we are going to go back to the dust from whence we came. Not as bad, but if distrust among the banks continues, due to complete blindness from lack of financial transparency where the toxic waste is still hidden, then the whole machinery will just shut down and the avalanche of insolvencies will just take us there that much faster.
All I can say to the bankers is...
Economics 101
:^)
Economics organization?
Kind of an unusual description. I wonder what they do primarily. Are they a bank? Research? Investment?
It’s risky but a trader you are. Good Luck!
Ha! I know I should keep my trap shut, but it is like turning the other cheek. Eventually the devil in me just has to slap them back.
Most people expect to see very high inflation. I am starting to come around to the probability that high inflation is only temporary. A severe credit crisis and all of the losses from plunging house prices could lead to deflation. We did have inflation with no GDP growth in the 70s, so it is possible. But I am starting to lean toward the idea that the contraction economy will be so severe, it will squelch inflation.
The downside is, your assets will be squelched as well. Cash will be king, unless I am missing something. I do hope and pray we just have a recession ala 1982, but I am not so sure anymore. I expect something more severe with a good bit of deflation and wealth destruction. But I am just guessing — educated guess, so who knows. We will only know in hindsight.
This is wrong. The lion's share is held by Americans. The lion's share of the foreign-held debt is owned by Japan and China.
You will notice them less for now, they’ll be back on the next cycle. By then I shall have re-invested. Good Luck and Happy Hunting.
A lot of peoples’ wealth is in their homes. Homes are way over valued, IMHO. I cannot believe the home prices. They are insane. But people are so used thinking they are paper rich they will freak out when their homes devalue to more normal levels.
Evans-Pritchard is a great admirer of the way the US economy is organized. What he sees here is not the collapse of the US economy into a Mad Max-like state - it's a credit bubble-related collapse. What he's saying is that we might be seeing our first serious recession since the early 1980's.
I'm pretty sure this will be a profitable trade.
Move to cash. Get out of debt. Reduce spending. Reduce investing. That is my prescription. If the economy doesn’t go downhill, you’ve mistimed some bargains on that rental property or on that stock you wanted. Big deal.
But it is all too easy for people today to see house prices down and think it is time to invest in property. Or they see stocks oversold and pump heavily, figuring they can liquidate the cash when needed.
It is a good time to be in cash, a good time to be out of debt and a good time to reduce spending and to save. That is about all you can do. You can’t build a castle and fill it with mercenaries and peasants...
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