tag:blogger.com,1999:blog-4868637208708070057.post6466017167783029029..comments2023-10-26T08:39:39.501-04:00Comments on The Global Observer: Thoughts On Bailouts and Market Economies...The Global Observerhttp://www.blogger.com/profile/13799206875756322855noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-4868637208708070057.post-82112368312713861462008-10-02T15:44:00.000-04:002008-10-02T15:44:00.000-04:00I saw a long interview with Warren Buffet last nig...I saw a long interview with Warren Buffet last night about this very thing. <BR/><BR/>A couple things he said were this:<BR/>1. The Treasury Secretary job is more important than the V.P.. <BR/>2. The current situation is like oxygen. When you have it you are fine. Without it for 5 min. You are desperate. This is in reference to credit.<BR/>3. The bailout of AIG was a good deal for the govt. They were close on private money but couldn't make it work. He would hire the person that made that deal for the govt. The reason is our govt. can wait things out. Buy cheap and hold.<BR/>4. He feels the same way about this deal with loan crisis. He refers to it as an investment. If done right it could be positive in the long run. <BR/>5. He does believe in the capitalist market. He would make some tweaks to it but it works. These ups and downs are a part of greed reflected in other periods such as the dot com. It's like Cinderella at the ball. We all know there is a pumpkin time and we keep on wanting to stay. The other problem is there is no clock on the wall.<BR/>6. How long till were out of this. He said 6 months to 2 years. 6 months he agreed is not realistic. Could actually be a long time as in 5 years.<BR/>7. He said the next step will be inflation. <BR/><BR/>I believe the further big picture of this deal is the value of the dollar. "The current account is the broadest measure of America's dealings with the rest of the world because it includes not only trade in merchandise and services but also investment flows. The deficit represents the amount of money the country is borrowing from abroad.<BR/><BR/>For all of last year, the current account deficit totaled $731.2 billion. That imbalance meant the country needed to borrow $2 billion every day from foreigners to finance its activities.<BR/><BR/>So far, foreigners have been happy to sell their products to the United States and take U.S. dollars in payment, investing that money in everything from U.S. Treasury securities to American stocks and real estate.<BR/><BR/>However, there are concerns that this massive transfer of wealth into foreign hands could at some point disrupt the U.S. economy if foreigners decide they do not want to hold as much in dollar-denominated assets. If they began dumping their dollar holdings, big declines in U.S. stock and bond prices could follow, sending the dollar sharply lower in value and pushing domestic interest rates up." <BR/><BR/>Hopefully Paulsen will do some good negotiations on this. People like the Chinese take our dollar and then invest it in other countries where they are running a surplus. <BR/><BR/>As many read this blog are interested in foreign travel and Latin/South America. I did see a recent interview with the President of Colombia. <BR/><BR/>Overall he comes across as a great man, and he is. Still you get the feeling you would not want to get on his bad side. <BR/><BR/>He is definitely concerned about losing his support from the Republicans with fighting terrorist and the Free Trade Agreement which he is still working on. <BR/><BR/>Colombia has some oil which is being invested in by the Chinese. But if the US market falls and a Democrat gets in office the Colombian peso may be affected. <BR/><BR/>The Colombian economy has been doing much better. According to their President much of this is the result of working against terrorist.<BR/><BR/>The question may be providing debt relief to Americans as part of this crisis. There is a point not to when looking at how Colombia managed to bail out their banks in crisis <BR/><BR/>http://www.brookings.edu/opinions/2008/0930_financial_crisis_cardenas.aspxHank Robinsonhttps://www.blogger.com/profile/17802803538410222171noreply@blogger.comtag:blogger.com,1999:blog-4868637208708070057.post-91408201092402553522008-10-02T14:33:00.000-04:002008-10-02T14:33:00.000-04:00Thanks for the comments Bibi and Hank. I think Han...Thanks for the comments Bibi and Hank. I think Hanks observation about a lot of this bailout money going to cover our foreign obligations is a point well taken. <BR/><BR/><A HREF="http://www.rushprnews.com/2008/10/02/the-united-states-public-debt-tops-ten-trillion-dollars-for-the-first-time/" REL="nofollow">http://www.rushprnews.com/2008/10/02/the-united-states-public-debt-tops-ten-trillion-dollars-for-the-first-time/</A> points out the fact that "As of April 2008, Japan, Mainland China and the United Kingdom were the three largest holders of US Treasury Securities. Japan and China own a combined one trillion dollars plus of US debt, with Japan holding $592 billion and China holding $502 billion.<BR/><BR/>The ten trillion dollar figure works out to $32,895 for every man, woman and child in the United States."<BR/><BR/>I'm quite convinced that a significant portion of this emergency bailout will go to these foreign holders of our treasury notes. After all, SEc of Treasury Paulsen will have almost carte blanc on using most of these funds with very little oversight. Scary scary...The Global Observerhttps://www.blogger.com/profile/13799206875756322855noreply@blogger.comtag:blogger.com,1999:blog-4868637208708070057.post-77658439608174569112008-10-01T07:23:00.000-04:002008-10-01T07:23:00.000-04:00Been wondering what's the "hold up"? Seems there m...Been wondering what's the "hold up"? <BR/><BR/>Seems there may be a part of this bill worth looking at. <BR/><BR/>What first seemed to stretch from our local banker to Wall Street may now be a serious concern on the global debt we have accumulated over the many years.<BR/><BR/>All the trillions we have borrowed may now be coming due. Or the world may foreclose on America. <BR/><BR/>Consider this section of the "bailout bill".<BR/><BR/>SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.<BR/><BR/>The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.<BR/><BR/>Looks like we can't just print money anymore. <BR/><BR/>I don't think the banks in China, England or Australia will take that. <BR/><BR/>You have to wonder why they have to push this thing so fast. Aren't the other great leaders of the world in NY right now?<BR/><BR/>There are many American taxpayers that are not happy to bail out the fat cat bankers. I wonder what they would think if they found out this money may be going to foreign soils.Hank Robinsonhttps://www.blogger.com/profile/17802803538410222171noreply@blogger.comtag:blogger.com,1999:blog-4868637208708070057.post-76673235855772995392008-09-29T21:49:00.000-04:002008-09-29T21:49:00.000-04:00This comment has been removed by the author.Hank Robinsonhttps://www.blogger.com/profile/17802803538410222171noreply@blogger.comtag:blogger.com,1999:blog-4868637208708070057.post-46910238147020440922008-09-29T21:26:00.000-04:002008-09-29T21:26:00.000-04:00Bueno, Ed, auque el dia de hoy fue terrible, lo ...Bueno, Ed, auque el dia de hoy fue terrible, lo que yo percibo de tu blog es que, este proyecto no paso por alguna razon.<BR/><BR/>Mas adelante se veran los cambios en la economia de EEUU, segun entiendo puede ser mejor asi.<BR/><BR/>Ojala que asi sea, pues este lunes negro, fue devastador. <BR/>"No hay mal que por bien no venga" Dice un dicho popular en mi Pais.<BR/>SaludoBibianahttps://www.blogger.com/profile/10458425175434626232noreply@blogger.com