News that U.S. households are spending less and saving more, ultimately reducing their debt, might appear to be an uplifting scenario. In reality, many of those households are defaulting on their debt, not tightening their belts. Capital Economics Group reported that almost half of a $77 billion decline in total household debt during the second quarter was because of bank charge-offs of credit card debt, residential mortgages and other consumer loans.
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Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Wednesday, September 29, 2010
Thursday, August 5, 2010
Treasuries Lack Safety, Liquidity for China, Yu Yongding Says
ALARM! ALARM! - US Government policies are unmasked for the threat they pose to the Wealth of Nations and worldwide stability. Can a war be far behind?
Excerpts from an article that appeared on Bloomberg yesterday. For full article click on headlie above for a direct link to it.
By Bloomberg News Aug 3, 2010 4:06 AM EDT
U.S. Treasuries fail to provide safety or liquidity when it comes to managing China’s $2.45 trillion foreign-exchange reserves, said Yu Yongding, a former central bank adviser.
“I do not think U.S. Treasuries are safe in the medium-and long-run,” Yu, a member of the state-backed Chinese Academy of Social Sciences, wrote yesterday in an e-mailed response to questions. China is unable to sell the securities in a “big way” and a “scary trajectory” of budget deficits and a growing supply of U.S. dollars put their value at risk, he said.
The cost of pegging the Chinese currency to the dollar is “intolerably high” and threatens the welfare of Chinese people, Zhang Ming, deputy chief of the International Finance Research Office at the Chinese Academy of Social Sciences, wrote today on the website of China Finance 40 Forum.
“The U.S. government has strong incentives to reduce its real burden of debt through inflation and dollar devaluation,” he said. “Whichever way it is, the yuan-recorded market value of Treasuries will fall, causing huge capital losses to China’s central bank.”
Excerpts from an article that appeared on Bloomberg yesterday. For full article click on headlie above for a direct link to it.
By Bloomberg News Aug 3, 2010 4:06 AM EDT
U.S. Treasuries fail to provide safety or liquidity when it comes to managing China’s $2.45 trillion foreign-exchange reserves, said Yu Yongding, a former central bank adviser.
“I do not think U.S. Treasuries are safe in the medium-and long-run,” Yu, a member of the state-backed Chinese Academy of Social Sciences, wrote yesterday in an e-mailed response to questions. China is unable to sell the securities in a “big way” and a “scary trajectory” of budget deficits and a growing supply of U.S. dollars put their value at risk, he said.
The cost of pegging the Chinese currency to the dollar is “intolerably high” and threatens the welfare of Chinese people, Zhang Ming, deputy chief of the International Finance Research Office at the Chinese Academy of Social Sciences, wrote today on the website of China Finance 40 Forum.
“The U.S. government has strong incentives to reduce its real burden of debt through inflation and dollar devaluation,” he said. “Whichever way it is, the yuan-recorded market value of Treasuries will fall, causing huge capital losses to China’s central bank.”
Wednesday, July 21, 2010
U.K. seems to be moving to monetize its debt
What makes you think the Fed (here in the USA) is not doing the same thing? Watch what is done, not what is said.
The British government denied that it plans to inflate away debt, but its actions suggest that is exactly what it intends to do, according to The Economist. A program
by the government's National Savings and Investments that paid the rate of inflation plus 1% was closed because of its runaway popularity. Meanwhile, the Bank of England recently bought more than enough debt to fund the deficit for a year, a classic debt-monetization technique that dates back to Germany's Weimar republic, The Economist notes.
The British government denied that it plans to inflate away debt, but its actions suggest that is exactly what it intends to do, according to The Economist. A program
by the government's National Savings and Investments that paid the rate of inflation plus 1% was closed because of its runaway popularity. Meanwhile, the Bank of England recently bought more than enough debt to fund the deficit for a year, a classic debt-monetization technique that dates back to Germany's Weimar republic, The Economist notes.
Monday, July 19, 2010
Collapse of talks for a Hungarian rescue might trigger market panic
The sovereign-debt market might remain in turmoil for a while, after the International Monetary Fund and the EU walked away from discussions with Hungary regarding its budget deficit, experts said. The decision puts the IMF's $25.8 billion bailout for Hungary on the back burner. Bloomberg Businessweek so far market taking this in stride. There should be caution with Greece ahead of next disbursement of funds in August.
Thursday, July 15, 2010
"Wall of debt" could hurt the fragile economic recovery
U.S. and European governments are expected to sell about $4 trillion in bonds this year, creating a "wall of debt" that could course through the global financial
system for years. One concern is whether the market and the fragile economy could absorb the debt or whether the situation would result in a Greek-style crisis for less creditworthy governments. Analysts differ on their assessment of the issue.
The Washington Post
system for years. One concern is whether the market and the fragile economy could absorb the debt or whether the situation would result in a Greek-style crisis for less creditworthy governments. Analysts differ on their assessment of the issue.
The Washington Post
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