WLD:
"Is that a fire I see out there? Oh well, not to worry,.... just hand me that fiddle."
Not to put too fine an edge on it, but this is precisely the way I view your current Fed chairman. I am a great admirer of the U.S., but I worry about where the country is heading, given the Fed's "pour-liquidity-on-any-and-all problems" approach to financial matters. Unfortunately, the dough the Fed so cheerfully dispenses is either borrowed or printed. Neither bodes well for the future well being of the country.
The U.S. is running current account and trade deficits (not to mention federal and state government deficits) that require staggering inflows of foreign dough, just to maintain the status quo. Many respected (but for obvious reasons -low key) global commentators think that we are fast approaching the point where the support of those deficits is no longer viable, primarily because they already soak up such a huge chunk of the globe's available cash. Near term, those deficits cannot possibly do anything but grow (war is expensive, unemployment benefits are exploding, state budgets are in disarray, etc.). Might a "day of reckoning" be lurking out there somewhere? No question there is if those so far, oh-so-accommodating foreign investors start to have misgivings. One thing is for sure and that is if such a day is closing in on us, we will see advanced evidence of its imminent arrival here in the currency, bond and stock markets.
Hard to believe that the world's strongest military power could easily be drop kicked in the groin by disenchanted foreign debt holders, but that is precisely how matters stand. Hard to believe that U.S. leadership has allowed this state of affairs to blossom.
Best, Earlie
Best, Earlie |
