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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: futures speculator who wrote (37122)7/27/2005 3:29:55 PM
From: futures speculator  Read Replies (3) of 110194
 
I think EVERYONE should read this:

pimco.com

Note: PIMCO is the biggest bond fund in the world with over $450bn assets under mgmt.

You can go to
C. The Debt Trap and Risk of Global Confrontation
D. Musical Chairs and Dollar Liquidation

And the conclusions:


VII. Summary of Policy Recommendations

There is a need to immediately implement a number of important structural measures affecting the global participants. Included in this Category I list of critical adjustments to increase savings, reduce debt and improve current account deficit are:

1. Cut by 15% across the board all U.S. social spending programs.
2. Increase U.S. tax rates.
3. Increase incentives to save in U.S. - consumption taxes.
4. Devise capital controls such that capital cannot be exported out of the U.S.
5. Debt renegotiation/forgiveness by countries with cumulative high trade surplus with the U.S.
6. Change the Federal Reserve Bank objective function to include a constraint on the size of the trade deficit.
7. Prohibit sale of highly sensitive technology and defense to any and all foreign countries.
8. Revalue Chinese currency to U.S. dollar by 40 percent.
9. Targeted protective tariffs if needed.
10. Renegotiate WTO.
11. Prohibit the Fed from purchasing bonds from foreign holders of U.S. debt.

All of the above measures are of great and equal importance and need to be implemented as a package. Piecemeal implementation violates the requirement that all participants must contribute to the readjustment of the global economy.

Category I initiatives need to be followed by a second set of policy measures that we will call Category II. These initiatives are crucial to the long run political-economic stability of the U.S. economy.

1. Increase U.S. defense spending.
2. Develop incentive-based programs for youth, education and health. Take funds from programs for elderly.
3. Reduce minimum wage in U.S. by 50%.
4. Repeal regressive Prop 13 in California.
5. Tax prosperous countries that have benefited from prior IMF bailout recipient
6. Proceeds disbursed to IMF "equity" holders.
7. Tax holders of Iraqi debt for invasion "appreciation" and ultimate "occupation" appreciation value.
8. U.S. Treasury needs to extend average maturity of the debt issued.

Finally, a few additional measures are necessary to help safeguard U.S. national interests. These measures include:

1. Conflict of interest disclosure by any person providing policy advice.
2. Prohibit consulting contracts for any public official leaving office for two-year period.

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