Comments on: World’s financial community gives two fingers to the US http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us?utm_source=rss&utm_medium=rss&utm_campaign=world%25e2%2580%2599s-financial-community-gives-two-fingers-to-the-us The website of economist, author and broadcaster, David McWilliams Thu, 09 Feb 2012 08:37:06 +0000 hourly 1 http://wordpress.org/?v=3.2 By: Dave Krongard http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-32115 Dave Krongard Sat, 21 Jul 2007 17:10:47 +0000 http://783274502#comment-32115 America was finished in 1973, the day Nixon took us off the gold standard. This enabled the Federal reserve to invent wealth and buy oil by printing dollars. Now we have so many USD in circulation, the only thing that makes them worth any value is America's military threat...and the naive stupidity of the American people who still think that the U.S. is the center of the universe. America is bled-dry of any net worth or value. Once America can no longer bleed the rest of the world of its money and resources, she will collapse upon herself not unlike the Roman empire. Global warming, the debt crisis, the housing crisis, Peak oil, nuclear arms proliferation, global pandemics, global water and food shortages, burgoining and unsustainable social welfare systems, overpopulation, runaway pollution.....all of this can be traced back to post WW2 America's market expansion. Beware humanity...this giant will not die quietly... America was finished in 1973, the day Nixon took us off the gold standard. This enabled the Federal reserve to invent wealth and buy oil by printing dollars. Now we have so many USD in circulation, the only thing that makes them worth any value is America’s military threat…and the naive stupidity of the American people who still think that the U.S. is the center of the universe.

America is bled-dry of any net worth or value. Once America can no longer bleed the rest of the world of its money and resources, she will collapse upon herself not unlike the Roman empire.

Global warming, the debt crisis, the housing crisis, Peak oil, nuclear arms proliferation, global pandemics, global water and food shortages, burgoining and unsustainable social welfare systems, overpopulation, runaway pollution…..all of this can be traced back to post WW2 America’s market expansion.

Beware humanity…this giant will not die quietly…

]]> By: Tony http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-32040 Tony Thu, 19 Jul 2007 16:15:35 +0000 http://783274502#comment-32040 Hi All this stuff about the world about to collapse in on the "Anglo-Saxon" world is just too pessimistic. After all, I do remember hearing similar prognoses around Reagan's time, until the Clinton era balanced the books again. The current dollar weakness is associated with a whole series of factors, such as the stock market crash post-2001, the FED reaction to that crash of introducing very low interest rates, then the Bush tax giveaways, the spending on the Iraq war, and so on. All of these contributed to a low interest environment followed by asset price bubbles. But the American economy is still the powerhouse of the world and will be for some time to come. So China has an Intel factory? Good. But only the manufacturing is done by Chinese workers and the profits go back to the USA (and Intel share-holders). The same goes for all those foreign companies setting up in China - like Nokia. The wealth is shared between the low-paid Chinese workers (the minority of it) and the profitable intellectual rights-holders (the majority of it). Wealth is more than about manufacturing. The "Anglo-Saxon" world still produces the ideas and culture that powers the world economy - from Microsoft, to Dell, to Intel, Google, to Pfiser, the US owns the copyright on high technology. When China starts producing original ideas and technologies that conquer the world, that is when to worry! Hi
All this stuff about the world about to collapse in on the “Anglo-Saxon” world is just too pessimistic. After all, I do remember hearing similar prognoses around Reagan’s time, until the Clinton era balanced the books again. The current dollar weakness is associated with a whole series of factors, such as the stock market crash post-2001, the FED reaction to that crash of introducing very low interest rates, then the Bush tax giveaways, the spending on the Iraq war, and so on. All of these contributed to a low interest environment followed by asset price bubbles. But the American economy is still the powerhouse of the world and will be for some time to come.
So China has an Intel factory? Good. But only the manufacturing is done by Chinese workers and the profits go back to the USA (and Intel share-holders). The same goes for all those foreign companies setting up in China – like Nokia. The wealth is shared between the low-paid Chinese workers (the minority of it) and the profitable intellectual rights-holders (the majority of it).

Wealth is more than about manufacturing. The “Anglo-Saxon” world still produces the ideas and culture that powers the world economy – from Microsoft, to Dell, to Intel, Google, to Pfiser, the US owns the copyright on high technology. When China starts producing original ideas and technologies that conquer the world, that is when to worry!

]]> By: Declan http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31967 Declan Tue, 17 Jul 2007 12:56:11 +0000 http://783274502#comment-31967 Hi J A, the article "not so risk-free" was in the economist on the 16/06/07, its an interesting one! I do agree that the article above is a bit sensationalist but then again we probably wouldn't read it if it wasn't! Hi J A, the article “not so risk-free” was in the economist on the 16/06/07, its an interesting one!
I do agree that the article above is a bit sensationalist but then again we probably wouldn’t read it if it wasn’t!

]]> By: John Ivory http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31933 John Ivory Mon, 16 Jul 2007 19:45:55 +0000 http://783274502#comment-31933 www.imf.com - international music feed / think David meant www.imf.org http://www.imf.com – international music feed / think David meant http://www.imf.org

]]> By: David McWilliams http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31761 David McWilliams Fri, 13 Jul 2007 07:49:54 +0000 http://783274502#comment-31761 Thanks very much for all your comments. Scruff and Stone my apoligies, the data I was working on was taken from a piece I read in a credible journal *the Dines Newsletter* - an extremely thoughtful publication - about the difficulties the treasury was having in selling paper to foreign investors, particlarly Asians. The issue is the constant flooding of the world financial markets with US paper money, coming back to Kurt9's point about "non-tradable" asset price inflation in the US and the wisdom of the present monetary arrangements. I see the same delinquency occuring here in Ireland on a weekly basis as we flood our economy with borrowed paper money which is driving up prices, making us less competitive and enfeebling us in the process. The US is our model - for all the right reasons - it is also our best friend, but you know what they say about friends..its only your mates will tell you the truth. I take the same approach when I see you guys point out my sloppy research. Thanks for keeping my on side and thanks for all the comments. Best David Thanks very much for all your comments. Scruff and Stone my apoligies, the data I was working on was taken from a piece I read in a credible journal *the Dines Newsletter* – an extremely thoughtful publication – about the difficulties the treasury was having in selling paper to foreign investors, particlarly Asians. The issue is the constant flooding of the world financial markets with US paper money, coming back to Kurt9′s point about “non-tradable” asset price inflation in the US and the wisdom of the present monetary arrangements. I see the same delinquency occuring here in Ireland on a weekly basis as we flood our economy with borrowed paper money which is driving up prices, making us less competitive and enfeebling us in the process. The US is our model – for all the right reasons – it is also our best friend, but you know what they say about friends..its only your mates will tell you the truth. I take the same approach when I see you guys point out my sloppy research. Thanks for keeping my on side and thanks for all the comments. Best David

]]> By: Scruff http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31754 Scruff Fri, 13 Jul 2007 04:52:32 +0000 http://783274502#comment-31754 Declan, Thanks for the clarity, and i did miss the point about Asian participation in the auction. Stone does have a point about the article being a little sensationalist. I think it's a bit early to say that Asian central banks have lost their appetite for Traesuries. There are few markets in the world that are deep enough for these Banks to "get set" in size. Good to see some informed opinion and discussion though!!! Declan,

Thanks for the clarity, and i did miss the point about Asian participation in the auction. Stone does have a point about the article being a little sensationalist. I think it’s a bit early to say that Asian central banks have lost their appetite for Traesuries. There are few markets in the world that are deep enough for these Banks to “get set” in size.

Good to see some informed opinion and discussion though!!!

]]> By: J A Stone http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31723 J A Stone Thu, 12 Jul 2007 18:08:09 +0000 http://783274502#comment-31723 Declan, I've reread the article. No where within it does he mention the idea that asian investors backed off buying Treasuries. Unless there is some sequence of codewords that I'm totally missing. I'm not actually attacking the basic premise of his article...that the US has gotten sloppy in its money management, and that the US is asking for a serious ass-kicking in the global securities market because of it. I am, however, questioning the underlying premises and "facts" that he references to get to his primary premise. I also have access to the Economist. Please find your reference and post it. I still maintain that it's a sloppy article at best. Stone Declan,

I’ve reread the article. No where within it does he mention the idea that asian investors backed off buying Treasuries. Unless there is some sequence of codewords that I’m totally missing.

I’m not actually attacking the basic premise of his article…that the US has gotten sloppy in its money management, and that the US is asking for a serious ass-kicking in the global securities market because of it. I am, however, questioning the underlying premises and “facts” that he references to get to his primary premise.

I also have access to the Economist. Please find your reference and post it.

I still maintain that it’s a sloppy article at best.

Stone

]]> By: Declan http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31715 Declan Thu, 12 Jul 2007 13:28:57 +0000 http://783274502#comment-31715 Hi Scruff and Stone! I think if you read David's article a bit more carefully you would realise what he is saying, is that the people who were buying these Treasury Notes in recent times were Asian investors!. On this occassion the uptake of these issues was substantially down. ie the asians only purchase 10% of this issue the remaining amount was obviously purchased, if it wasn't it would have made global headlines. There was a recent article in the Economist that points this out too! I can't get the link but it is worth checking out! I too have access to view some of this data, I can see the issues and the volumes auctioned and amounts tendered. At this point there doesn't seem to be any problems with the interest in the debt but there is an underlying trend that could be worrying. I also read another article that if current trends relating to US treasuries persists they could be lowered to junk statue within 10-15 years. (I don't believe this could happen, but there is some imbedded difficulties that need to be addressed and will be address but it could be economically painfull to sort out) Hi Scruff and Stone! I think if you read David’s article a bit more carefully you would realise what he is saying, is that the people who were buying these Treasury Notes in recent times were Asian investors!. On this occassion the uptake of these issues was substantially down. ie the asians only purchase 10% of this issue the remaining amount was obviously purchased, if it wasn’t it would have made global headlines.
There was a recent article in the Economist that points this out too! I can’t get the link but it is worth checking out!
I too have access to view some of this data, I can see the issues and the volumes auctioned and amounts tendered. At this point there doesn’t seem to be any problems with the interest in the debt but there is an underlying trend that could be worrying.
I also read another article that if current trends relating to US treasuries persists they could be lowered to junk statue within 10-15 years. (I don’t believe this could happen, but there is some imbedded difficulties that need to be addressed and will be address but it could be economically painfull to sort out)

]]> By: Andymatic » World Financial Community Sees Through US IOU-based Economy http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31693 Andymatic » World Financial Community Sees Through US IOU-based Economy Thu, 12 Jul 2007 03:19:34 +0000 http://783274502#comment-31693 [...] On June 15, the US government was given two fingers, not by a bunch of internationalist lefties, but by its main supporters, the international financial community. The US treasury tried to sell new US ten-year treasury bills worth $8 billion to plug the gap between what Americans spend and what Americans save. For the first time ever, foreigners said: ‘‘No thanks.” In doing so, foreign investors kicked off a process that has left the financial markets and the dollar in a tizzy. By taking up only 10 per cent of what the US government was trying to sell, investors have screamed: ‘‘The emperor has no clothes!” They are beginning to see through the Americans’ game. Since the beginning of the century, the US has been playing a big game of IOU with the rest of the world. Americans have been spending more than they are saving, and are asking the rest of the world to pay for the gap. In return, the US gives us a piece of paper which states that the American government will pay us back in 30 years. [...] [...] On June 15, the US government was given two fingers, not by a bunch of internationalist lefties, but by its main supporters, the international financial community. The US treasury tried to sell new US ten-year treasury bills worth $8 billion to plug the gap between what Americans spend and what Americans save. For the first time ever, foreigners said: ‘‘No thanks.” In doing so, foreign investors kicked off a process that has left the financial markets and the dollar in a tizzy. By taking up only 10 per cent of what the US government was trying to sell, investors have screamed: ‘‘The emperor has no clothes!” They are beginning to see through the Americans’ game. Since the beginning of the century, the US has been playing a big game of IOU with the rest of the world. Americans have been spending more than they are saving, and are asking the rest of the world to pay for the gap. In return, the US gives us a piece of paper which states that the American government will pay us back in 30 years. [...]

]]> By: Scruff http://www.davidmcwilliams.ie/2007/07/08/world%e2%80%99s-financial-community-gives-two-fingers-to-the-us/comment-page-1#comment-31690 Scruff Thu, 12 Jul 2007 02:39:33 +0000 http://783274502#comment-31690 I work in the Bond market (non USD) and as J A Stone pointed out there are great flaws in this article. The suggestion that only 10% was taken up was news to me. J A Stone is also correct in that a 10 year US Treasury is a Note not a Bill. I am a big fan of David's work, but have to say this article disappointed me. There is talk that Asian central banks and petro dollars are seeking to diversify out of US Treasuries. I work in the Bond market (non USD) and as J A Stone pointed out there are great flaws in this article. The suggestion that only 10% was taken up was news to me. J A Stone is also correct in that a 10 year US Treasury is a Note not a Bill.

I am a big fan of David’s work, but have to say this article disappointed me.

There is talk that Asian central banks and petro dollars are seeking to diversify out of US Treasuries.

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