Thursday, February 11, 2010

US BONDS ARE AS SAFE AS PEARL HARBOUR IN 1941


Pauper children from Sweden.

What is happening to Greece will happen to the USA?

The following have huge debt problems: Japan, the UK, Ireland, Spain, Greece, Portugal, Iceland and the USA.

In the Financial Times, on 10 February 2010, Niall Ferguson tells us that a Greek crisis is coming to America

According to Niall Ferguson:

1. Greece has the following choices

(A) have a huge reduction in government spending - reducing the deficit from 13% to 3% of GDP within 3 years

OR (B) Decide not to pay back the money it owes.

In other words - default on all or part of the Greek government's debt.

OR (C) be given money by Germany and others. In other words, some kind of bail-out.


Map of countries by external debt in $US, from CIA factbook.

2. The USA is like Greece.

"US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941."

3. When the USA finds it difficult to get people to lend it money, interests rates have to go up to attract potential lenders.

4. Higher interest rates can hurt home owners and businesses.

Some heavily indebted businesses could be in deep trouble.

The government's debt would increase due to higher interest payments having to paid.

The economy would slow down.


5. The Chinese have greatly reduced their lending to the USA.

Their purchases of Treasury Bonds have been reduced from around 47% of new issuance in 2006 to 20% in 2008 to an estimated 5% in 2009.

6. Morgan Stanley thinks the interest rate on some bonds will rise to 5.5% this year.

7. In early February 2010, Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted.

2 comments:

Anonymous said...

http://sol.sapo.pt/PaginaInicial/Sociedade/Interior.aspx?content_id=161798&dossier=Caso%20Face%20Oculta

nobody said...

Hey Aang,

That's the second time I've seen Niall Ferguson mentioned in here recently.

It's curious since I'd never heard of him until two weeks ago when someone gave me his Ascent of Money series. Have you seen it? Talk about Rothschild apologist! Ferguson gets the personal grand tour of the mansion by Rothschild himself. Ferguson gets this because it's his task to explain to us all that the Rothschilds aren't behind anything at all and in fact were very lucky to have made any money at all and that really we should be thankful to them because had they not so bravely risked their money we'd all be living in the stone age. Or somesuch. And anyone who says otherwise is an anti-semite.

Anyway, it's truly dreadful. Following on from that, it occurs to me that if Niall Ferguson is telling us something it's because he's been told to, and because it suits whomever it was that told him to say it. I'm sure you can dig it.

 
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