Page 1 of 2
Ins and outs of the US economy
Posted: Mon Jun 07, 2010 1:30 am
by Gob
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Wilkins Micawber from Charles Dickens' novel David Copperfield.
June 4 (Bloomberg) -- President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”
The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.
“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”
Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”
Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?
http://www.bloomberg.com/apps/news?pid= ... .4E&pos=15
Re: Ins and outs of the US economy
Posted: Mon Jun 07, 2010 2:44 am
by The Hen
man that is some massive debt there.
I'd be looking for a six pence if I was an American.
Re: Ins and outs of the US economy
Posted: Mon Jun 07, 2010 5:24 am
by dales
I'm afraid once the US goes down the sh-tter, it will drag the rest of the world down with it.
Re: Ins and outs of the US economy
Posted: Mon Jun 07, 2010 6:50 am
by Gob
dales wrote:I'm afraid once the US goes down the sh-tter, it will drag the rest of the world down with it.
That may be true dales..
Australian shares lost 2.8 per cent today,
wiping nearly $40 billion off the market's value, as investors poured out of equities following disappointing news on the US economy, concerns over Hungary's financial situation and softer commodities prices.
At the close, the benchmark S&P/ASX200 index was down 123.5 points, or 2.8 per cent, at 4325.9, while the broader All Ordinaries Index fell 121.7 points, or 2.7 per cent, to 4350.7. All sectors were in the red, with materials plunging 3.3 per cent and energy shares slumping 3.2 per cent.
"Equities were not the place to be today. There was a flight to safety to the US dollar and cash," said CMC Markets analyst David Taylor.
http://www.smh.com.au/business/markets/ ... utostart=1
Re: Ins and outs of the US economy
Posted: Mon Jun 07, 2010 12:34 pm
by rubato
Gob wrote:"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Wilkins Micawber from Charles Dickens' novel David Copperfield.
If the only alternatives are the Pound, the EU, the Yen and the Yuan?
Yes. Obviously. That is why rates are so low. The UK/EU are in far worse shape and have stopped showing leadership in facing a far deeper crisis than the US and begun showing suicidal cowardice. The Yen has been dragging bottom for nearly 20 years. The Yuan is artificially pegged by a totalitarian dictatorship (which makes it less predictable) the country has serious corruption problems, and it is supported with trillions in US debt anyway.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Tue Jun 08, 2010 9:10 pm
by Gob
So the US is buying its own debt, and you do not see this as a problem?
Re: Ins and outs of the US economy
Posted: Wed Jun 09, 2010 12:30 am
by dales
Wait until the feces really hits the props around 2012
Re: Ins and outs of the US economy
Posted: Wed Jun 09, 2010 12:30 am
by rubato
Gob wrote:So the US is buying its own debt, and you do not see this as a problem?
Try reading.
The
world is buying US debt and no, that is not a problem for us. That is "cheap money" for us. That is a future where they are so deeply invested in our interests that they will act to help us even if they don't like us all that much.
Good for us.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Wed Jun 09, 2010 1:16 am
by Gob
rubato wrote:
Try reading.
The world is buying US debt and no, that is not a problem for us. That is "cheap money" for us. That is a future where they are so deeply invested in our interests that they will act to help us even if they don't like us all that much.
Good for us.
yrs,
rubato
Does that not say that the "incremental";
in·cre·ment
1.
something added or gained; addition; increase.
2.
profit; gain.
3.
the act or process of increasing; growth.
purchaser of your nation's debt is the US itself?
Does that not indicate that the US is increasingly buying it's own debt, which is surely a unsustainable way of dealing with national debt.
Re: Ins and outs of the US economy
Posted: Thu Jun 10, 2010 12:20 pm
by rubato
Foreign governments are increasing their purchase of US debt:
http://www.ustreas.gov/tic/mfh.txt
The UK holds $279B up from $128B 1 year before.
Japan holds $784.9B up from $686.7B 1 year before.
China holds $895.2B up from $767.9B 1 year before.
$376.4B increase for just 3 foreign governments.
The global economy is a big place and they need a large economy to invest a large amount of money in.
The US govt buys US debt when the Social Security system runs a surplus (as it has for a long time) and the surplus is loaned to the treasury.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Thu Jun 10, 2010 12:27 pm
by rubato
Gob wrote:
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?
http://www.bloomberg.com/apps/news?pid= ... .4E&pos=15
Does that not say that the "incremental";
....
Does that not indicate that the US is increasingly buying it's own debt, which is surely a unsustainable way of dealing with national debt.
No, the US buys its own debt when the SS system runs a surplus. Other than this kind of accounting function if we bought our own debt we would have ... a lower debt.
What that says is that of all the debt sold the US governments debt has been an increasing fraction. That is an arithmetic consequence of the fact that the US deficit has grown the past couple of years.
Total debt sold = (US Govt) + (all other) = a + b
(all other) = "in US capital markets" not globally.
fraction = (US Debt) / ((US debt)+(all other)) = a / (a+b)
If the size of the deficit grows relative to the total then it is arithmetically neccessary that the ratio increases.
Another way of saying it is that of the total debt sold the US gvernments debt forms a larger fraction. I would think this would be obvious.
It does not say that the US is buying its own debt in any greater degree.
You are innumerate.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Thu Jun 10, 2010 10:14 pm
by Gob
It's a shame you cannot post without insult, but that speaks volumes about you.
I did have hope that if I treated you without rancour here you'd have the decency to do the same.
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 12:18 am
by dales
Oh, well.
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 10:04 am
by loCAtek
Right Rube, it's a fresh start, be a mate and take advantage of it!
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 12:08 pm
by rubato
Gob wrote:It's a shame you cannot post without insult, but that speaks volumes about you.
I did have hope that if I treated you without rancour here you'd have the decency to do the same.
If you post snottily I will respond in kind, as I did here.
You started it, hypocrit.
And then of course you found a way to avoid admitting that your post was not only snotty but confused on the facts.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 1:43 pm
by tyro
I missed the “snottlly”, perhaps it is how one is poised to read into the words of someone with whom you have had a rocky past.
Fortunately, an accusation of being innumerate isn’t the sort of schoolyard taunt that marked that very same past.
I can’t defend the desire to “respond in kind”. There is no such thing. A measured response by the giver is ALWAYS seen as excessive by the getter. In fact, it is almost always seen as excessive by everyone. This explains why, unchecked, the repartee gets down to CSB level too quickly.
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 2:38 pm
by Lord Jim
I did have hope that if I treated you without rancour here you'd have the decency to do the same.
Really?
When was your last drug test?
Re: Ins and outs of the US economy
Posted: Fri Jun 11, 2010 10:11 pm
by Gob
LOL!!
Re: Ins and outs of the US economy
Posted: Sat Jun 12, 2010 4:34 pm
by rubato
I posted only on-topic until you posted personally.
That is the fact.
yrs,
rubato
Re: Ins and outs of the US economy
Posted: Sat Jun 12, 2010 6:03 pm
by Scooter
He did not "post personally". He directed a question about the topic to you ("you do not see this as a problem?") and you chose to interpret it as some kind of slur. Even after you chose to move into insult mode ("Try reading."), he ignored it and continued to speak to the topic.
You know very well that I was not one of the posters who chose to make you into a personal punching bag at the CSB, and that in fact I came to your defence on occasion when I saw it being completely underserved, so I hope you take it in the spirit in which it is intended when I ask that you dial it back; we do not need to relive the feuds of ancient history here if all parities truly do not want to. Read what people write as it is written and without dragging CSB baggage behind you, and this could be a fun and informative place to hang out. Otherwise, it will become a cesspool. Our choice.