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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (34971)	6/28/2005 3:20:12 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

I have two questions for you: 1. How sure can you be that we can service the foreign debt already on our books without the surplus recycling on which we are now dependent? (I am referring here to the extent to which the current account deficit will persist even after the "bust".) 2. How can you be so sure of this statement? <Its [China's] own internal consumption is not even close to being ready to handle downturns in the West.> 1a. Service the debt? All we have to do is print more money. In the current system there is not a single country other than perhaps oil producers that could service their debt. We are fortunate in that our debt is in dollars. There is ZERO chance of a default. - Looking again, perhaps you mean why will they keep lending to us? China needs to feed its people, to do that China needs jobs. Unless and until China's internal demand is sufficient to achieve that, China will be willing to service the debt IMO. BTW it will not be just the US in this boat but the UK and Oz, and probably lots of other countries in trouble. In short it is just one big mess. 2a. Would they be so kind as to support the US with goods so cheap if that was not the case? Seriously, there is zero evidence of huge internal demand in China but ..... there is evidence of a small and growing internal demand. In due time we will be F*d. IMO that is not a near-term issue. Amother way of looking at it is per capita resource and energy use in the US vs China, something has to give, but it will not be an overnight thing.