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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (2387)11/19/2003 9:25:44 AM
From: mishedlo  Read Replies (1) of 110194
 
Obviously, the Asians hold the chips used for the stabilization of the American situation, but they're finally going to insist on a real, not the current phoney "all on the backs of Asians" defense of the US currency, even if they agree to some resettings. Let's just call it the new "well, fuck you too" (WFYT), Asian/IMF package for the US. The Chinese in particular need to cool off their economy and they are not going to care if American consumers retreat, they need that now anyway.

I fully understand this wrinkle.
Where it misses the boat is that China and Japan need US consumers to keep their economies going. Thus they are not likely to shoot themselves in the foot by refusing to buy treasuries. Even IF they do, it will affect the 10 yr and 30 yr more so than the fed funds rate. US spending will have to plunge and it will not be pretty for US stocks or bonds, but that does not mean the FED FUND rate has to change.

Now, it is clear we need them more than they need us, but for now (and these things can go on far longer than anyone thinks possible, the world is dependent on keeping US consumers spending) Is this reckless to the point of being amoral? Hell yes it is. It will end in a deflationary crash, not an inflationary one as ther are NO jobs to pay off the debt.

It all comes back to jobs. There are none. They are all in China and India.

M
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