You are viewing an obsolete version of the DU website which is no longer supported by the Administrators. Visit The New DU.
Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Reply #75: Here is a good analysis of how the US could be brought to it's [View All]

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Archives » General Discussion (01/01/06 through 01/22/2007) Donate to DU
Spazito Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jul-23-06 10:24 AM
Response to Reply #35
75. Here is a good analysis of how the US could be brought to it's
knees because of it's foreign owned debt:

The best quick analysis I've seen of the fiscal squeeze comes from New York University professor Nouriel Roubini, in his useful online survey of economic information, rgemonitor.com. He notes that with the U.S. current account deficit running at about $900 billion in 2006, "in a matter of a few years foreigners may end up owning most of the U.S. capital stocks: ports, factories, corporations, land, real estate and even our national parks." Until recently, he writes, the United States has been financing its trade deficit through debt -- namely, by selling U.S. Treasury securities to foreign central banks. That's scary enough -- as it has given big T-bill holders such as China and Saudi Arabia the ability to punish the U.S. dollar if they decide to unload their reserves.

But as Roubini says, foreigners may decide they would rather hold their dollars in equity investments than in U.S. Treasury debt. "If we continue with our current patterns of spending above our incomes, by 2013 the U.S. foreign liabilities could be as high as 75 percent of GDP and an increasing fraction of such liabilities will be in the form of equity," he explains. "So, let us stop whining about the dangers of unfriendly foreigners owning our firms and assets and get used to it."

(NOTE the following paragraph given the current world events!)

Here's how bad it is: The worst thing that could happen to the United States, paradoxically, would be for Arab and other foreign investors to take us at our xenophobic word and decide that America doesn't really want foreign investment. If they pulled out their money, U.S. financial markets would plummet in a crash that might make 1929 look like a sleigh ride.

http://www.washingtonpost.com/wp-dyn/content/article/20...



Printer Friendly | Permalink |  | Top
 

Home » Discuss » Archives » General Discussion (01/01/06 through 01/22/2007) Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC