Quote:
http://www.freemarketnews.com/Analys...id=28&nid=4097
......“They’re both mad,” said a colleague yesterday. One spends money it hasn’t got. The other sells to people who cannot pay. Maybe China and the U.S. represent equal and opposite delusions: One over-spends. The other over-saves. But while the delusions are opposite, they are not equal. There is a great Exodus of power and money from West to East. <b>There is a big difference between being on the prospering end of that passage as opposed to the losing end. China’s working class is getting richer; America’s is not. China’s treasury piles up credits; America’s piles up debits. China’s consumers have savings that they could spend, if they wanted to. America’s consumers have only credit...made available to them at present rates only so long as it accords with the whim of the market and the will of lenders. The Chinese are owners...Americans are becoming renters. The Chinese are free from debt; Americans are chained to it.</b>
More news from our currency counselor...
Chuck Butler, reporting from the EverBank world currency trading desk:
“The Jobs Jamboree on Friday saw job creation jump to 243,000, with last month's 193,000 revised down to 170,000 and the unemployment rate tick back up to 4.8%. But, the dollar bulls basked in the sun anyway!”
For the rest of this story, and for more insights into the world currency markets, see today’s issue of
<a href="http://dailyreckoning.com/Writers/Butler/Articles/031306.html">The Daily Pfennig</a>
Bill Bonner, back in London with more views...
*** “More than $2 trillion of U.S. mortgage debt, or about a quarter of all mortgage loans outstanding, comes up for interest-rate resets in 2006 and 2007,” reports the WSJ this morning. <b>“...some borrowers will have trouble meeting the higher payments and may be forced to sell their homes or could lose their homes to foreclosures.”</b>
Hmmmn. Who could have seen that coming?
*** “China keeps buying the dollar to defend the yuan's peg...There are many reasons for this, but one major consideration continues to be the perception of China's dependence on an export driven economy. That may not be the case much longer,” writes Chris Hancock, a regular contributor to our editorial e-mail threads.
“There's a good article in the FT today highlighting Long Yongtu, Chinese diplomat who worked on the WTO entry, and is comments that China's economic development is driven more by domestic demand than many realize. That could either be diplomatic smoke blown at the US or a typical Chinese style warning that a policy change is on the horizon. Meaning, they might seriously consider stop buying the dollar.
<b>“As of February '05, Japan and China hold approximately a combined $900 billion, or 46 percent of foreign Treasury holdings......</b>
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The preceding description sums up nicely where we are, and where we're headed. We live in a country with no trade policy, no energy management/conservation policy, and....no sound, trade or budget deficit management policy.
We are headed for both massive deflation of domestic assets and currency, and massive inflation, too. Nobody can be sure what the sequence of the two opposite events will be, or if our political leaders and "the Fed" will have any control or even influence, in the outcome, or in the speed in which events unfold.
<b>IMHO, as a citizen/resident of the U.S., I believe that our situation is dire enough to consider endorsing the leadership of, and voting for, politicians who would candidly state plans similar to the following:</b>
The only option that I see as offering a hope of extending the duration of a domestic level of prosperity that even approximates what we currently enjoy, is to use the military immediately in an "all out" ultra imperialistic assault on the military and industrial assets of rest of the non-aligned world. The military strikes would be followed up by siezing and securing petroleum fields and raw material deposits, all over the world, and a declaration by the U.S. of default on existing trade debt and on federal bond obligations. We must act quickly before we can no longer afford to maintain our military forces in their existing state, and before those who would resist us, become stronger.