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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Jim Willie CB who wrote (724)9/12/2003 7:29:51 PM
From: mishedlo  Read Replies (3) of 110194
 
How would you respond to this point counterpoint?
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So how scary is it now when foreign countries and investors own 38% of the treasuries? And what would be the effect of the foreigners starting to think that maybe the treasuries (a.k.a. "securities") are worth a little less than when they first bought them?
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What's the big deal? We already have their money. And if they dump them making the price go way down, the treasury buys them back at a huge discount and we win again. Then foreigners begin to buy them back because they can't find any place to put that money without a much higher risk than if they would have just held on the the US bonds in the first place.

The problem with people who make these doom and gloom assessments is they look at things in terms of thousands, 100 thousands, and millions. What in the hell is someone going to do with multiple billions that has less risk that US bonds? The US is the chief buyer of goods made in other countries. If the US starts to wobble, the rest of the world will die first because no one will buy their stuff. Risk is relative. Whatever risk there is in the US is multiplied many many times anywhere else for mutil-billion dollar accounts.
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