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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (66464)	10/6/2003 9:17:41 AM
From: mishedlo	Read Replies (2) \| Respond to of 94695

Foreigners will nearly 100% guaranteed stop financing this mess at some point without higher interest rates. Do you agree? how soon? VI, I wrote the above. How would you respond to the reply below from Rien ================================================== I have been pondering this question too. But fail to come up with an answer. Currently the situation is clear: Foreigners are buying so they can continue exporting. If they stop buying must they then stop exporting? If so, then why would they want to stop?. Stopping would hurt them. Just imagine that you are a small country, producing more than you need. You export the excess, and in return buy foreign debt. Your workforce is happy, the factories are humming, your economy is doing quite nice. When you stop buying debt, you have to stop producing excess. Your workforce is reduced, your economy goes into the gutter, political instability is the result. You don't want that. I bet that you would opt for keeping on buying debt. Even if you fully well know that this debt is basically worthless. If you keep this going on indefenitly, then there will come a time where the additional debt you buy will be just enough to compensate for the declining value of the debt you already have. I.e. you are exporting your excess for naugth. The big question is: Does this matter?. Its not as if you were really planning on ever calling that debt anyway. To me this is very similar to the middle ages here in europe. Landlords would have people working for their wealth, and in return these people were... well, ... allowed to live. Such a scheme works. It can work for very long times, until: the people who slave away don't take it anymore. But in our present day case, these people are living quite happily themself, so why quit doing it? So the question remains: Why would the US creditors stop buying US debt? Best, Rien.