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

To: Real Man who wrote (27571)	3/23/2010 3:24:56 AM
From: axial	Respond to of 71456

Globally and locally, there is no line in the sand. Limits are elastic. Sustainability is the key, arbitrated by judgments on repayment. If fiat money is created by debt there's been a huge increase in global liquidity. Is default an acceptable alternative? History is the guide. This link was posted 3 years ago; the author has since become a best-seller. "As noted, investment banks and official bodies, such as the International Monetary Fund, alike have argued that even though total public debt remains quite high today in many emerging markets, the risk of default on external debt has dropped dramatically because the share of external debt has fallen. This conclusion seems to be built on the faulty premise that countries will treat domestic debt as junior, bullying domestics into accepting lower repayments or simply defaulting via inflation. The historical record, however, suggests that a high ratio of domestic to external debt in overall public debt is cold comfort to external debt holders. Default probabilities depend much more on the overall level of debt. voxeu.org Message 2466565 --- As you noted in the past, defaults don't necessarily mean the end of the world. Even though fundamentals don't appear to support US - or many other country's - debt sustainability, that determination hasn't been made. Barring a "trigger" event - eg. a major crisis like ME war - it's not clear the end is near. Not yet. Jim