nwfdailynews.com — Over the past several years, Americans and their government enjoyed one of the best deals in international finance: They borrowed trillions of dollars from abroad to buy flat-panel TVs, build homes and fight wars, but as those borrowings mounted, the nation's payments on its net foreign debt barely budged. Now, the easy money is coming to an end.
Sep 25, 2006 View in Crawl 4
buelldozerSep 26, 2006
Your viewpoint is so bizzare that my brain is having trouble holding it.Let's agree to disagree, and that you are very strange.
sabotankSep 26, 2006
ya know, i was in iraq in 2003 and i don't remember seeing any euro's....just saddam's face staring back at me on all the currency there.....
bluetshirtSep 26, 2006
look, borat's already not funny...
vampiregabeSep 26, 2006
This story is political hogwash. It is meant to stir up the hornets nest but flaws the facts.First public debt is DIFFERENT than the governments debt so the line that "They borrowed trillions of dollars from abroad to buy flat-panel TVs, build homes and fight wars, but as those borrowings mounted, the nation's payments on its net foreign debt barely budged." Is blatantly FALSE cause there is not a single citizen of the US that borrowed money to pay for the war.Second the theory about higher interest rates is just astounding. First the government SETS the rates that it borrows, so if the government borrows money, it sets the interest rate that it pays the money at, NOT the investors.Third consumer debt does NOT affect the strength of the dollar that much. Government debt sets the rate of the dollar.Fourth while the article talks about US foreign debt, it makes little (none) about the foreign debt that other countries are indebted to the US. The US is the LARGEST debtor and creditor in the world. We borrow and lend more than ANYONE.Fifth it does not explain that the far majority of money borrowed in this country is by BUSINESSES not consumers.Sixth the US government set the interest rates it PAYS not what the investor wants. If the investor does not like the interest rate, there is no negotiation.The interest rate fluctuates, but is SET BY THE GOVERNMENT, so guess what, it can lower it as well.Seventh the money the US borrows are real dollars, then after a few years pays them back with interest. Say the interest rate is 4%, and over that time the inflation rate has increased 5% annually, well the investor has actually taken a loss because the money paid back to the investor does not cover the eroding of the dollars worth from inflation.The whole story is crap. I could continue but anyone in first year economics could tear that story to shreds. Heck I didn't even need to look in any of my economics books to discredit it. The real question that ponder economists is if and when the buying slows, how sever of a recession will the world dip into (depression)? The biggest spenders/buyers removing themselves from the world economy will bring down the curtain harder on everyone else than it would in the US. Less than 25% of what the US makes is exported, the world sends more to the US by far.So what happens when we stop buying? That's the question.
igotdugoutSep 26, 2006
America is having deficits year after year.Hong Kong has a insane surplus year after year.Where does most the money America get from? Hong Kong. Through selling bonds.
argoffSep 26, 2006
Ok, here's what's going on. The US always had this thing where we would buy things from overseas on credit, but it wouldn't hurt us because we would water down the dollar faster than the interest payments on the credit. We could get away with this because 1) productivity was increasing so people could get more bang out of their buck anyhow, and 2) US dollars are used to purchase oil, so people needed them anyhow, and 3) the US has good credit and a high credit rating.The only problem was that the method they used to water down the dollar was to loan more dollars out into circulation, (mostly thru housing) and so now we have a serious debt problem. Also, that increasing productivity means that you can get away with slimmer profit margins, but which also means that there is less profit left over to apply toward debt payments. So now the US economy is in deep deep trouble. We have too much debt, and not enough margin to pay it off. If they print up the money to pay it off, we have hyperinflation. If they don't we have cascading defaults and a great depression. They will probably try to balance it in the middle, meaning stagflation.One more thing, this problem was not caused by the president or the war on terror. They might have influenced it, but the fundamentals about the debt were going to happen anyhow because we have a paper based monetary system and not a gold based one.
dbloodnokSep 26, 2006
The important thing to remember is that with an unbacked paper currency, the only way money can come into existence is through debt. This is a zero sum game: If all debts were paid in full, no money would remain in circulation.It is the interest charged on the debt/money created that makes this the biggest scam in history. Either you get into more debt to pay the interest, or you get the money off someone else (ie: by selling them something) and they go into debt to pay you.
geronimoSep 26, 2006
China exports more to Europe:<a class="user" href="http://china.seekingalpha.com/article/16638">http://china.seekingalpha.com/article/16638</a>China's exports to the zone surpassed those of the U.S. for the first time in July 2005. Five-months into 2006 China's exports were $1 billion ahead of the U.S. $68 billion of exports to the zone, for 26% y-o-y growth.
rogerstrongJun 18, 2009
>> And Canada... wouldn't>> even exist as a country>> without the US.Dream on.Canada was in World War II from the beginning, years before the U.S. It was in WWI from the beginning - the U.S. didn't get involved until it was winding down. We have other allies.