This is from one of the "crash scenario" reports I've seen:
When Asia collapses, money and credit will be
destroyed. Japanese banks and insurance company's
will be forced to sell U.S. assets to help finance
losses in Asia. So will the Chinese. For years, China
and Japan have exchanged their goods for U.S. paper.
When Japan's economy collapses, they will convert
this paper for tangible assets.
The U.S. is the largest debtor in the world, much of it owned by
foreigners. They have the largest current account deficit in the
world. These factors have caused major financial problems for
every country where they have existed. When the Japanese are
forced to sell U.S. Treasury debt, it will cause a panic in the
treasuries which will sharply increase U.S. interest rates. In
addition to other factors already mentioned, higher interest
rates will accelerate falling U.S. corporate profits, will
accelerate the drop in the U.S. stock market and will accelerate
a move to a much higher U.S. government budget deficit. When
foreigners sell treasury's, Americans must buy them, which will
take money out of other economic activities. Future government
budget deficits will have to be financed by Americans, and
Americans may find that they may not be able to run large current
account deficits. When Americas banker goes broke, we may see
another paradigm shift.
Correct or not? I really cannot say.
Good luck,
THC |
