Who Holds America's Debts ???

[Jah_rastafar_I]

Your local BT store should have a copy.

Or just go to youtube and watch it. 4 hrs long and 1.1Gb in size to d/l

<iframe width="560" height="349" src="http://www.youtube.com/embed/QY8g_IsI_gY" frameborder="0" allowfullscreen></iframe>

 

[niwdee]

[video=youtube;CxJDGgF7M_w]http://www.youtube.com/watch?v=CxJDGgF7M_w[/video]

 

[Conqueror]

Caesar's Money ?

Money was supposed to be a token for goods exchange which made barter trade obsoleted. This 'legal tender' token is often showing a monarch or someone of absolute authority of an empire or a country. The bible famous quote: Render unto Caesar... So, the Caesar's figurehead did emerge on the other side of the coin. But, in economics, the use of money becomes complicated. This ranges from payment of debt or crime, gambling, investment, interest rate to all sorts of instruments we see today. The same thing you get to see how your 3 or 5 room flats also become an investment 'tool'. Some people buy by a huge number just to keep it in his or her portfolio and they are not meant for the basic reason - for one's occupancy or habitation. What if everyone holds 2 or more units and no one wants to buy any additional unit ? The market will definitely crash, because everyone wants to get rid of them for liquidity (cash !) So, "Cash is King" after all. Oil is king ? Or black gold ? Gold and silver, better watch out for the pitfalls.


This video was posted by someone ?



[video=youtube;rPILhiTJv7E]http://www.youtube.com/watch?v=rPILhiTJv7E[/video]

 

[Qantas]

0.9+1+1.1=3.0
3.0+1.5+1.6=6.1
6.1+2+2.1=10.2
10.2+2.2+2.4=14.8
14.8+2.4+3.5+3.5=24.2
24.2+6.4+6.6=37.2
37.2+8=45.2
45.2+11.3=56.5
56.5+19=75.5

So we left with 24.5 unaccount for. Whoever holding this 24.5% is in deep shit.

Guys, Sg is not included in the figures. So I would not be surprised if our Auntie Ho has a stake in the remaining 24.5%, courtesy of our CPF.

 

[Sperminator]

Singapore is ranked top 10 with sovereign fund in the world... I won't be surprised if SGP hold alot of USD

 

[neddy]

Bro God is My Dog,

I am getting a little bit confused here... if everyone expects USD to crash (Which I highly doubt), and if Rothschild (the Bilderburger Group), owns the world's Financial Institution, why are they getting out of the Gold business?

And if JP Morgan holds majority of shorts on Silver...

Am I right to say that you are saying that the Gold & Silver Prices are manipulated to soar higher and higher, making everyone storming to buy Gold and Silver, and when they see a critical mass, they start to sell short! ???

Please share more bro! This is something that I've been puzzled... over the last 3 years, alot of people have been ranting on gold and silver... however, I do find something strange...

It is a long story about Gold. Basically, gold prices are set daily by 5 banks.

Silver is a more "cornered" commodity but hopefully another player like Hong Kong will make this metal more fun.

But as for the solution to the debt crisis which I had been talking about before the 2008 GFC, I have a story here. (Thanks to Nick from Melbourne!)


Four economists have decided to have a get together (with the aid of some time travel) to sort out once and for all what can be done about economic depressions.

Keynes, who co-owns the bar with Federal Reserve Chairman Ben Bernanke and President Barack Obama, has agreed to host the event and provide the social lubricant on the house. Along with a free lunch.
After some jovial sarcastic comments about how depressions cannot occur because the free market is always in equilibrium, the four intellectual enemies get down to business.

Irving Fisher, the eldest of the four, begins the discussion:
‘Too much debt is the problem. An economy that has borrowed too much money will experience a depression. It’s as simple as that. Here are the key factors:
(1) Debt liquidation – people and businesses default on their debt
(2) This causes the money supply to fall and there is distressed selling to pay off debt
(3) The value of money rises and prices fall (deflation)
(4) The net value of businesses fall ($ debt stays the same while $ assets fall due to falling prices)
(5) Profits fall
(6) Trade and employment decrease
(7) There is a loss of confidence
(8) People hoard money, as its value increases
(9) There are ‘complicated disturbances in the rate of interest’

Everyone nods in agreement. Fisher, an advocate of prohibition policies, gulps down some cranberry juice (he was also a health guru) and continues:
We can’t really stop the indebtedness from occurring, so we are stuck with many of the problems of the business cycle. But if we can stop the price level from falling, the contagion won’t spread. Viable businesses won’t be exposed to the falling prices of what they sell and so their debt levels should remain manageable. In other words, we can take the deflation out of the depression. That will make the downturn much milder.

Hayek, bored with the discussion so far, puts Keynes’ homebrew up to the light and examines it closely before asking Fisher:
And how do you plan to fix the price level?

Keynes sets down his already empty glass and comes to Fisher’s rescue:
Government spending! (Hic) If prices are falling, that’s a problem of aggregate demand. (Hic) Kick start spending and the economy will get going again. (Burp)

Hayek, offering his own glass of beer to Keynes, asks ‘and how will the government pay for the spending?’

Friedman, known for his ability to demolish the economics behind just about any government policy ... except the monetary kind ... puts down his bourbon and takes a deep breath.
Keynes is right about aggregate demand. But government spending causes a whole bunch of problems. Better to let the central bank handle this one. By engaging in some monetary stimulus with lower interest rates and more money, prices will stay stable and aggregate demand will be stimulated. That demand will keep prices up, along with the inflationary effects of more money.

Hayek asks Friedman the same question:
And how will the private sector pay for the spending? It seems to me that both Keynes and Friedman propose encouraging more borrowing. They propose more debt to solve the problem of indebtedness.
For government to spend, it must tax or borrow. In a depression, tax revenues fall and raising tax rates would reduce economic growth. If the government borrows, it will merely join the debt cycle, eventually becoming over indebted itself.
As for monetary stimulus, lowering interest rates will only encourage more debt. And printing more money will only stimulate growth if the banks lend out the new money – which means there will be more debt.
Both your policies advocate returning to what caused the problem – reflating the bubble. If they work, it will only make it bigger next time around.

Keynes dismisses this pessimism with his time-honoured philosophy: ‘Who cares? We’ll be dead by then.’
Friedman asks Hayek; ‘So what should be done then?’ Keynes chimes in; ‘Yeah, doing nothing would mean a terrible depression.’

Hayek sighs.
No. Doing nothing would have avoided the problem in the first place. You are right that over indebtedness causes a depression. People, businesses and governments all realise they cannot afford the debt. They invested the money in things that do not justify the cost of the debt by providing revenue that exceeds the debt. Now they have to liquidate that debt by paying it off or defaulting. And that causes the deflationary contagion that Fisher fears.
But why is there so much debt in the first place? And why was it so poorly invested? None of you seem to explain that. And don’t tell me it’s just a cycle. People make mistakes, but they only do it as a group at the same time when there is a reason for it – a cause.
Remembering that debt and money are synonymous in the monetary system we live in, it should become obvious. Who controls the price and quantity of money? The government and/or the central bank do. Along with the private banks that can create money out of thin air, as Fisher often laments.
Just as price controls, rationing and fraud wreak havoc in any industry they are employed in by government and monopolists, so they wreak havoc in the banking industry – the industry of money. And money is half of every transaction.
If government keeps interest rates too low and creates too much money, which is then multiplied by the banks, there is too much debt. Eventually this will lead to the over indebtedness that causes a depression. The money and debt vanishes because it was never real. It only existed as bookkeeping entries on the central banks and private banks balance sheets.
Profitable investments are financed by real savings – deferred consumption – not imaginary money created out of nothing. Entrepreneurs are fooled by this sleight of hand on the part of their bankers. They think they are investing real savings, with the consumption that was deferred becoming their demand in the future. But, as the savings weren’t real, the consumption wasn’t deferred and so never materialises. Thus, the malinvestments are exposed.

‘That may or may not be true, but you haven’t answered my question,’ Friedman points out. ‘Now that we are in debt, what should we do?’

Hayek smiles. ‘Buy gold.’

Reproduce here by Neddy - Gold relic & Austro-Hungarian economic school student

 

[Sperminator]

one mistake after another... thanks neddy for this story.

Gold & Silver still the preferred value denominator?

 

[neddy]

Guys
Our father and forefathers were so proud that a loan was considered an evil that they ended up saving to buy a house. By then they could only afford to buy something small while those who took loans ended up living in condo and private properties.

Every year I have to tell my staff to go buy private property and even tell them how to find lawyer. The ones living in HDB flat have expensive cars while those in private properties when young have modest cars. Go figure.

Many of them still send me XMAS/NY cards thanking me for setting them up for life.

The fact that we have to buy properties to "keep up" our living standards is an indication of the inflation associated with fiat money, governments & central banks collusion to create more money for governments to spend.

I am not saying that debt is no good or deferred consumption is good. All these have to be considered in a context of factors such as population growth.

Your advice will work with a baby boomer generation of increasing economic activities. Even commercial notes are welcomed when we know that US corporations are enjoying growth.

These days, we are facing a reduction in population in developed economies except Australia and USA. Underpricing REAL labour cost, overcapacity and the productivity mirage - the myths which Singapore believe in. That is when things fall apart. Is the solution for tiny Singapore in bringing in foreign talents? Yes. population growth is good for GDP!!! But Singapore is also building "bubbles" dream homes.

The G8 is losing its influence and the BRICs are heading for some domestic economic disasters. No-eye-see what will happen next!

The world need a hard landing so that everyone can restructure and move on. We are in a zombie state of economic existence - esp Asian countries who used the post-Asian Financial Crisis solution of keeping Reserve in ponzi debts!!!

2nd August is Groundhog Day again.

 

[neddy]

one mistake after another... thanks neddy for this story.

Gold & Silver still the preferred value denominator?

The world, before year 1971, is used to both Gold and Bi-metal (Gold / Silver in an agreed ratio of exchange) as a store of wealth.

 

[scroobal]

Anyone can guess why China (8%) and Japan (6.4%) are the biggest creditors among the foreigners? And other countries don't hold much of the US Debt. Take a guess as there seems to be a keen interest in this. I will explain later?

 

[scroobal]

Couple of comments. The thread is about US Debt not about what to invest in. The comments I made are in relation to why loans are taken by US and by most sensible people who have the ability to service it.


By the way, no expects USD to crash and no country more than China wants it to decline.

 

[neddy]

Anyone can guess why China (8%) and Japan (6.4%) are the biggest creditors among the foreigners? And other countries don't hold much of the US Debt. Take a guess as there seems to be a keen interest in this. I will explain later?

The obvious:
1. China & Japs are the largest exporting countries.
2. USA is the only country capable of absorbing all these debts.

 

[Sperminator]

let me guess scroobal, please explain your POV later after I share my 2 cents guess.

Japan from 70s to 90s are the biggest exporter of consumer electronics and cars to USA, and they end up lending USA for them to buy more from Japan.

China from 80s to now, and beyond is the biggest exporter of consumer electronics, and other low end, mid end, slowly moving towards high end products to USA, and they end up lending USA for them to buy more from China.

USA have been borrowing from the world since President Nixon removed the Gold/Silver peg to USD... and the Federal Bank have essentially siphoned off all the Gold and Silver from Fort Knox... nothing to siphon, created the Petroleum Recycling Dollars to prevent USD from crashing. it worked.

whereas for the other countries, they don't have manufacturing bases as big as China and Japan...

most of European & North America (USA + Canada) nations have already moved most of their manufacturing facilities to China / Japan... except for Germany which is very foresighted.

okay please share your POV scroobal... my guess is up.

 

[neddy]

Couple of comments. The thread is about US Debt not about what to invest in. The comments I made are in relation to why loans are taken by US and by most sensible people who have the ability to service it.


By the way, no expects USD to crash and no country more than China wants it to decline.

Before China can make the USD decline, it will already be in super hyperinflation mood.

 

[scroobal]

Gents

Very close. I will put it in point form so that it will be easier to follow.

1. US is the key market for both Japan and China.

2. If the US stops buying, both the Chinese and Japanese economies will nosedive.

3. If the US dollar declines in value in comparison to RMB and Yen, the US consumer can no longer afford to purchase goods and services from China / Japan and the Chinese/Japanese economies gets negatively impacted.

4. So both China and Japan either can keep their own currency low or keep the USD high or do both.

5. They have been doing both. The Japanese first began US treasury notes to prop up the dollar.

6. You need to buy US dollar to buy the treasury notes. This forces the price of USD to rise or least maintain the same level.

7. China followed as they cannot afford the US dollar to slide. The Chinese went one better by artificially keep the RMB below value.

8. The Japanese realised that they cannot continue to do that. So Japs began building plants and factories in US. Nearly all their cars are now manufacured in the US in small towns all near the mid west and south.

9. The Chinese are stuck. Their model is based on cheap labour unlike the Japs where they export the technology and know-how and use US labour which is close to Jap labour costs.

 

[scroobal]

Now that we know that both China and Japan have been buying US debt to prop up the US dollar, so why is the US dollar declining in the first place. Here is a simplistic view.

1. The US imports more from China and Japan than it exports. Partly because Japan protects its own industries and provides subsidies to its own producers and suppliers. Chinese labour is so cheap that it cannot compete.

2. Because China and Japan are net exporters so US consumers have to buy more Yen and RMB to purchase this. This causes USD to decline and the RMB and Yen to rise.

3. If there are no govt intervention, the situation is supposed to correct itself until there is balance in trade. Unfortunately China is so dependent on Cheap labour that they cannot ramp up or develop another model so they keep the good times going by buying more US debts causing the dollar to maintain or rise and keeping the RMB low.

 

[Windsor]

Unlike the 1970's when OPEC decided to raise the price of their oil, at least the flow of money was a 2-way street, i.e. the oil exporting countries buys from the US and hence money found it's own level which balance out the trade.

This time round, propping up the USD will be a lose lose situation for China and eventually when the RMB rises and USD falls, the Chinese will discover they had been screwed for working their ass out all these years with nothing to show for it.

The USD cannot be manipulated for long as the world economy depends very much on energy. Without energy the world will stand still. The US monopolises the energy market and because of that they are willing to enter into conflicts in oil-producing countries to ensure it does not fall into the wrong hands.

This is my layman's simplistic view of the world economy.

 

[Aussie Prick]

* Hong Kong: $121.9 billion (0.9 percent)
* Caribbean banking centers: $148.3 (1 percent)
* Taiwan: $153.4 billion (1.1 percent)
* Brazil: $211.4 billion (1.5 percent)
* Oil exporting countries: $229.8 billion (1.6 percent)
* Mutual funds: $300.5 billion (2 percent)
* Commercial banks: $301.8 billion (2.1 percent)
* State, local and federal retirement funds: $320.9 billion (2.2 percent)
* Money market mutual funds: $337.7 billion (2.4 percent)
* United Kingdom: $346.5 billion (2.4 percent)
* Private pension funds: $504.7 billion (3.5 percent)
* State and local governments: $506.1 billion (3.5 percent)
* Japan: $912.4 billion (6.4 percent)
* U.S. households: $959.4 billion (6.6 percent)
* China: $1.16 trillion (8 percent)
* The U.S. Treasury: $1.63 trillion (11.3 percent)
* Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt.

the rest ? the PRIVATE Federal Reserve

Actually China has more than that. The Chinese Govt has been secretly buying and masking purchases from the UK, plus direct purchases this year. Japan is in crisis mode too with the yen @79.

 

[longbow]

However, unlike Germany and japan - both countries are even more reliant than the Chinese on US export market, the Chinese has an enormous domestic market just like the US. Japan-US and Germany all produce similar up market products are strong competitors. Chinese are not in the game for the moment.

While their costs have been rising rapidly - most of it as a result of commodities (affects the whole world), they are still a formidable competitor as a low cost mfg because of their superior infrastructure. On top of that they are moving up market.

India/Cambodia/Bangladesh may have a lower cost of labor but their infra is hopeless so in the end finished product cost more! Visited India with friend in seafood business. Lots of fresh seafood but cost to bring to market makes it not worth the while. Power supply problems, poor roads, inefficient customs. Seafood is a time sensitive product - the fresher it is the more $ you can get. Same too for time sensitive clothing. Things like towels, bed linens, mens shoes (not as fashion conscious) can work well in India. But stuff with tight deliver schedules is not workable. Apple cannot afford for even a 1 week delay in delivery of the merchandise.

Then we have the huge Chinese market - just go ask LVMH, Mercedes, Caterpillar, GM, VW, Rollex, Airbus, Boeing - pretty much all that Japan, Germany, and US produces - China is their holy grail. If the Chinese stop buy, US and EU goods will nosedive too.

So Chinese are not as stuck or helpless as it seems.

As for debt, they forget to add HK's 1% to total Chinese holdings.

Gents

Very close. I will put it in point form so that it will be easier to follow.

1. US is the key market for both Japan and China.

2. If the US stops buying, both the Chinese and Japanese economies will nosedive.

3. If the US dollar declines in value in comparison to RMB and Yen, the US consumer can no longer afford to purchase goods and services from China / Japan and the Chinese/Japanese economies gets negatively impacted.

4. So both China and Japan either can keep their own currency low or keep the USD high or do both.

5. They have been doing both. The Japanese first began US treasury notes to prop up the dollar.

6. You need to buy US dollar to buy the treasury notes. This forces the price of USD to rise or least maintain the same level.

7. China followed as they cannot afford the US dollar to slide. The Chinese went one better by artificially keep the RMB below value.

8. The Japanese realised that they cannot continue to do that. So Japs began building plants and factories in US. Nearly all their cars are now manufacured in the US in small towns all near the mid west and south.

9. The Chinese are stuck. Their model is based on cheap labour unlike the Japs where they export the technology and know-how and use US labour which is close to Jap labour costs.

 

[longbow]

I think US $ continues to weaken because US has been printing more than market demand. Also sentiments are not good with potential of debt default so that brings down $.

Now that we know that both China and Japan have been buying US debt to prop up the US dollar, so why is the US dollar declining in the first place. Here is a simplistic view.

1. The US imports more from China and Japan than it exports. Partly because Japan protects its own industries and provides subsidies to its own producers and suppliers. Chinese labour is so cheap that it cannot compete.

2. Because China and Japan are net exporters so US consumers have to buy more Yen and RMB to purchase this. This causes USD to decline and the RMB and Yen to rise.

3. If there are no govt intervention, the situation is supposed to correct itself until there is balance in trade. Unfortunately China is so dependent on Cheap labour that they cannot ramp up or develop another model so they keep the good times going by buying more US debts causing the dollar to maintain or rise and keeping the RMB low.