Offtopic-
If there is a banking collapse in Japan, why would that mean that the Japanese cash in US Treasuries? An argument can be made that a banking AND currency crisis will result in money going to the SAFEST currency and banking system. You stated that last month $25 B moved from domestic (Japan) to abroad. I think that it would be a safe bet that most of the $25 B went into US Treasuries (part of the reason for the low US Treasury Bond yields?), you can bet not much went to Indonesia, Thailand, Korea, China... Besides, Japanese Banks are into the Asian Tigers like US banks were into Latin America in the late 70s to early 80's.
The greater the crisis gets, and the weaker the yen gets, the more money that the Japanese will be sending to the US as a safe haven. Note that Japanese interest rates are so low right now, and the currency is so weak; that the smartest investment at this moment is to borrow money in Japan, and buy US treasuries. They get a currency play on the weakening yen, and at least twice the yield.
BTW, Are you sure that the Japanese deficit is lower than ours? I wouldn't be surprised if their National Debt is in the same order of magnitude (% of GDP) as ours as well.
I agree our trade deficit is a big problem, and if the Euro ever becomes the defacto world currency instead of the $US, we'll be in very, very deep trouble.
|
