.JPEG)
This afternoon, there was a mad rush by bloggers to relay the message that Japan is planning to sell their holdings of US Treasuries, in an attempt to shore up the falling yen. It does not appear to be true, Chief Cabinet Secretary Hirofumi Hirano stated today "There is no such plan at all, at this point in the government."
THANK GOD!!!
It will start a cascade of selling by several countries, because the best price will go to the earlier sellers, as more Treasuries are put on the auction block each new bunch will have to have a lower price to compete and win bids against what is the price right now, in turn the interest rate on US issued Treasuries will need to go up in yield, effectively killing economic expansion.
Today the national Debt is over $12 Trillion, by 2010 it will be over $14Trillion. The biggest problem for the US Gov't is we need to sell around $100 Billion each month just to fund the budget for 2010. That does not include the interest payments on what we have already sold. Each month, another $50 Billion must be raised to keep the US from defaulting. We will be competing against our own Treasuries, and the winner will be whoever can offer the best return to what little money is out there ready to be reinvested. Expect interest rates to go up soon. It won't be too long before a large holder of Treasuries begins selling their holdings, "because they have to" and the event described above will happen. After that , who knows? It ain't a very rosy picture, I know that much.
8 comments:
my buddy has been trading stock since 1960. he's convinced its being manipulated by the gov't and plunge protect team. he keeps going short because the spy pe is 144 under GAAP. he is not happy.
your posts are always interesting and appreciated.
I wouldn't say the stock market is being manipulated by the government, but rather through the government by the biggest banks that received bailout monies. They seem to be playing a game not available to the average investor.
1) they are not marking to market hundreds of billions in investments backed by shaky housing loans and credit card debt.
2) due to this misvaluation on these investments, they are then allowed to borrow, from the Fed, against these and go into the market to speculate with the borrowed money. Subsequently, this has created a false value across the major indices.
It is amazing to me also that the p/e of the S&P as a whole is 144, not long ago a p/e ratio over 20 was considered dangerous territory for investors.
24 million kids in america live in extreme poverty, school teachers lose jobs and the nicest building in my town is the WFC 'private' bank building.
america is in decay. when the govt allows socialization of losses and privatization of profits, the rich get richer. that's why we have 5% of the world's population and house 25% of the prisoners. as more and more become poor the # goes up.
170,000 are cal. prisons. next yr cal. will spend more on keeping people locked up then what will be spent on higher education - a first
Only in America...... It became a self-evident truth to me in college, when the "evils" of the Soviet Empire were paramount, the idea that in a system such as that, the only progression for that society was to gain more freedoms. Being a student of history, it was pressed on me that societies are in constant flux. If the future of the then USSR could only get better, what was the future for the US? With the starting point of absolute freedom, could those freedoms be taken away? I feared that it might start getting worse. Not much happening to bust my premise apart. I don't see many of our elected officials falling on swords to guarantee the Constitution be followed.
yahoofinance posted the 1.9 trillion USA needs to borrow for 2101 budget and interest.
i read where china does not care about the debt or adding substantially to it. this becasue they will chrush our ability to manufacture products. we wont be able to catch up, or get geared up becasue of the debt. like msft at one time, china will have any competitor cornered.
China does care about the US adding to the deficit, as any new Treasuries dilutes the value of those coming before it, and they own a lot of Treasuries. Because of the global wage arbitrage started by the "free trade" crowd, the only way to bring those jobs back to the US is to have US workers accept the $2 per day in wages Chinese workers are paid.I do believe the lasting effect of the "free trade" argument will be drastically lower wages, across the board, what is happening right now is only the beginning of the new world order. "Free trade" was never meant to be free. It was a tool used to change the economic order in the US.
all you dicuss points to same conclusion.
regardng 10% making 50%: the average civiian govt job, with benefits is 120K a yr. the average private sector job, with benefits, is 60K per yr.
the top 25 banks have a combined marekt cap of 8 trillion. these banks have 208 trilion of dirivative exposure.
i expect the majority of these is ultra safe. but, let's say 20% have SOME risk. if this risky group takes, let's say, a 25% hit, that exceeds the cap. then what?
Post a Comment