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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Kailash who wrote (19639)	12/28/2004 9:16:13 PM
From: Rational	Respond to of 116555

<<First, this won't happen until large US corporations see it to be in their interest. >> If suppliers based in Asia and Mexico do not supply parts, they will lose the business they depended on. If U.S. Congress decrees to void international debt, a mutually destructive process for businesses around the world will ensue. But U.S. corporates will be net gainers at least in the short run like the oil and defense contractors in middle east invasion. Such decree will result in a crisis of the global payment system. But net debtors always gain from such crises. After a new equilibrium (the Great Depression kind) is reached, the U.S. can then try to restore the system. The U.S. commercial banks will not be affected when NY Fed that maintains accounts of Central banks of the world simple closes those accounts without making payments. Commercial banks have other serious independent problems. <<This would certainly trigger a large scale war and is not a sustainable business plan.>> The genius Clinton has publicly stated his fear about a potential Russia-China-India triad forming if the U.S. invaded Iraq and then Iran. Regime change was euphemism for gaining control over oilfields. Clinton floated the regime change doctrine because Iran has switched to euro and Iraq had de facto switched to euro and, indeed, the middle east except Saudi Arabia was increasingly trading in euro with Europe and Asia. Clinton defined a strategy of keeping India friendly enough to not join the triad because Indian Ocean is critical as it accounts for 60-70% of global trade. 9/11 gave an opportunity to U.S. to invade Iraq. In fact Indian government had almost promised to send troops, but did not due to severe public opposition. India has realized how it will likely be economically noosed by the American strategy. Now, Russia-China-India-Pakistan may block American move to control mid-east oilfields. An American invasion of Iran (which I see vividly happening) will define the game. U.S. is printing dollar promises and deploying borrowed capital (human and monetary) to bomb the rest of the world to retain control over major resources. Will this succeed? Well, I see the U.S. trying until it is credibly opposed because there are no other options except a financial surrender, as every defaulting debtor has to do. The U.S. as a debtor is more armed and powerful than its lenders. This makes the game different.