Posted on 09/24/2009 11:28:27 AM PDT by kellynla
The US is too dependent on foreigners buying up the country's debt and could face severe economic problems is that stops, Tiger Management founder and chairman Julian Robertson told CNBC.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Robertson said inflation is a big risk if foreign countries were to stop buying bonds.
“If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent,” he said. “It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”
Robertson said while he doesn’t think the Chinese will stop buying US bonds, the Japanese may eventually be forced to sell some of their long-term bonds.
“That's much worse than not buying,” he said. “The other thing is, they're buying almost exclusively short-term debt. And that's what we are offering, because we can't sell the long-term debt. And you know, the history has been that people who borrow short term really get burned.”
The only way to avoid the problem, he said, is to "grow and save our way out of it."
"The U.S. has to quit spending, cut back, start saving, and scale backward," Robertson said. "Until that happens, I don't think we're anywhere near out of the woods.”
Robertson is not very optimistic about the short-term.
(Excerpt) Read more at cnbc.com ...
Everything is down today, except the dollar for some reason. it’s up a penny to 77 cents. If you ask me, that represents 23% inflation.
That is called the ‘Schiff’ effect where you stimulate a economy crashed by debt and consumption with even more debt and consumption.
The idiot to call on this is NYT prize winner Paul Krugmann (Keynnesian) who claims Obama is not running enough debt and consumption and we need to triple it.
How about all those that think devalued currency is the way to prosperity??
The article is about Julian Robertson of Tiger Mgt who is predicting the "Armageddon"
“I don’t know where we could get the money. I think we’ve let ourselves get in a terrible situation and I think we ought to try and get out of it.”
How about slashing spending, completely eliminating hundreds of programs. Sorry, there’s no money for your food stamps/prescription/bridge/reasearch/airport. Pay for it yourself. Sooner or later we will do this, the sooner we do it the less it will hurt.
LOL
Should be self-evident, I suppose.
But that’s the plan, right? Just keep electing people from one of the 2 Parties, and they’ll do the right thing.
They won't need to sell it. Obama's true believers will cling to any lifeline available, short of admitting their own responsibility in electing clowns to congress and a fool as president.
People cannot say that they haven’t been warned. The outcome of this will be really ugly but perhaps it will be the only way to kill off all of the liberal social programs that we cannot pay for when the credit card gets cut off.
The hedgies gave at least 75% of their political donations to RATS last year. They could stop feeding the hand that is making this mess.
It’s almost Armageddon if the Japanese and Chinese don’t buy our debt,” Robertson said in an interview. “I don’t know where we could get the money. I think we’ve let ourselves get in a terrible situation and I think we ought to try and get out of it.”
What??? No!! Where the he11 was your concern back when we “getting into this mess” If memory serves you were one of the cheerleaders.
This GNS moment brought to you by Porculous, the natural stimulant.
2. There will be at least one major jihadist attack on US soil during Obama's turn as well as a MAJOR attack by a nation-state on US interests elsewhere, which Obama will handle about as well as Carter's abortive hostage-rescue attempt.
3. The Cold War will re-start in earnest.
Cheers!
Makes you wonder why Obama just gave Khadaffi’s sons $400,000,. doesn’t it?
Learn to live below your means all your career to avoid dog food during retirement, like the rest of us.
And if you didn't -- too bad. You get the same sympathy as you gave the white males who were offshored to the Third World so Jack Welch could afford to get divorced and marry his 2nd wife.
Cheers!
The people have done a lot of that in their own lives. To which the government and Federal Reserve respond in Keynesian fashion of borrowing (or printing) and spending even more to make up for the people's new found thrift.
I fear that we will have to learn an even harder lesson than the past year's crash gave us before we (especially the government) pull our heads our of our backsides.
One Bad A*se* Mistake AMERICA!
Anyone who supported, and promoted, our current Free Trade policy with Communist China...is responsible
You cannot continue to run a huge trade deficit with Communist China. Nothing is more stupid than relying on a Communist regime for borrowing and to continue trade deficits
The only way out of this is to slap tariffs on Communist China....either the money is recouped in tariffs or the ChiComs lend more money to offset the tariffs.
Nothing is a s stupid, treasonous, or seditious as running up a huge trade deficit, and a huge debt, with a nation that wants to eliminate you. People need to wake up to reality
I hate to sound stingy,(not really, that just sounds nicer) but maybe we ought to think about keeping our aid for our aid.
It is a foolish investor that throws good money after bad. China and Japan will prop us up only so long as it continues to be in their interests. If the US continues on its current trajectory, their will be a rush for the exit as neither wants to be left holding rapidly devaluing dollars.
They are currently trying to shed the dollar holdings, but they can’t do it quickly. They have to walk a fine line continuing to buy our debt while converting their holdings to real assets. Mines, oil leases, refineries.
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