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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (20933)	6/23/2009 11:53:24 AM
From: GST	2 Recommendations Read Replies (1) \| Respond to of 71455

<Everybody knows the Japanese have a high saving rate> But apparently not everybody understand the difference between countries with massive savings and countries with massive debts. <You've conveniently ignored (or have no rational explanation for) debt-to-GDP in Australia... thus the argument that high debt to GDP always causes failure of the economy is twice defeated.> You have ignored the fact that the impact of the debt-to-gdp ratio is a function of whether a country has a current account surplus or deficit. You seem not to be able to see how things work. Japan and China are not debtor nations even though they both have substantial government deficits -- they are the suppliers of global credit. We are on the other side -- we are the debtor nation. You still operate under the false impression that Japan's debt and our debt are somehow similar in nature and impact -- nothing could be further from the truth.

To: axial who wrote (20933)	6/23/2009 12:41:03 PM
From: Archie Meeties	Read Replies (1) \| Respond to of 71455

TRIG, debate about the size of the debt obscures a more critical question, which can be summarized like this; "What is the ROI on the debt?" Given that the US government has historically had extremely low borrowing costs (and still does), there are plenty of examples of when government debt yields a positive ROI. The resolution trust following the bailout of the S&L's comes to mind. Great returns, a good use of debt. As I pointed out on the BDBBR thread, the ROI on the first tranche of the TARP funds is positive. I suspect much of the Australian ROI on their debt is strongly positive, given that they've used it to develop infrastructure.