American Melt Down?

Discussion in 'Business & Economics' started by Michael, Sep 15, 2008.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    And to keep the seventh fleet warships between them and China. - Why they will be left holding a big big bag of nearly worthless green paper someday. They do not dare do what all others with lot of Treasury bonds are doing - set up a sovern fund to buy real assets instead. Probably still economically smart decision - they have had very low denfense expenses since 1945, so even if all of their US reserves are lost, it may be about a wash. - IMHO, in addition to the better education provided to ALL OF their children than the US does, the fact that their economy has not been burdend by huge annual militrary expenses is why a nation with no natural resources is the second (perhaps soon the first?) economy in the world. (They will still be selling ever increasing amounts of High Value added stuff to China when US & EU are in depression.)
     
    Last edited by a moderator: Sep 18, 2008
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  3. John99 Banned Banned

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    U.S importing goods from China made China what it is today.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    No I had not. thanks. Seems like Japan has gold fund, not a sovern wealth fund.Perhaps that is better as gold held dose not depend on ownership laws of some other country as title to a coal deposit etc. dose.

    I know that India has huge amounts. What is just on the arms and finger of their women is impressive.

    Do you know how much physical gold held in India, Japan & China compared to the annual production total?

    Perhaps someone good at searching can get this data? Also how much physically in the USA is owned by other governments, etc. not USA or Americans?

    PS to SAM: Think how much richer both India and Packestan would be if they simply agreed to make Casmir et. al. in dispute areas a separate nation and drastically cut their mutually off-setting military budgets.
     
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  7. S.A.M. uniquely dreadful Valued Senior Member

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    Have you seen the amount of gold they have?

    http://query.nytimes.com/gst/fullpage.html?res=9501EFDD1439F931A1575AC0A967948260

    By country:

    Japan $881 billion (2006 est.)

    http://www.globalfirepower.com/list_gold_reserves.asp

    The only country with more gold is China at $1493 billion

    Is it a coincidence that they also hold the most US treasury securities?

    Japan: 593.4 billion dollars

    China:518.7 billion dollars

    http://www.ustreas.gov/tic/mfh.txt

    edit: interesting pattern in Japanese holdings of US treasury notes from July 2007, don't you think?

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  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Yes. Japan is being more clever than I realized. - Growing their gold and reducing the paper US paper assets.
     
  9. John99 Banned Banned

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    And Japan too.
     
  10. S.A.M. uniquely dreadful Valued Senior Member

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    You have to think like an Asian.

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    You do know they pay for oil in yen?

    http://www.financialsense.com/fsu/editorials/dorsch/2007/0726.html
     
  11. spidergoat Liddle' Dick Tater Valued Senior Member

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    And walk like an Egyptian?
     
  12. S.A.M. uniquely dreadful Valued Senior Member

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    Does that lead to gold?

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    As I recall, that was the strategy used by the US after WWII to convert the dollar into an international currency [hoarding gold, not walking like an Egyptian]

    Nope but it would be interesting to know. A lot of gold in India is "hidden" because once people buy it, they rarely sell it.

    This is the latest I could find, its a year old.

    http://useconomy.about.com/b/2007/07/04/foreign-ownership-of-us-assets-greater-than-2005-gdp.htm
     
    Last edited: Sep 18, 2008
  13. spidergoat Liddle' Dick Tater Valued Senior Member

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  14. Michael 歌舞伎 Valued Senior Member

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    I read one of the reasons Japanese wanted to invade mainland China in WWII had to do with gold fever. Even hundreds of years before, Japanese pirates told stories about Chinese hoards of gold - but, the Chinese never kept their gold in any centralized location (aka never with the State) and supposedly they buried it somewhere around or in their family compounds; and so the Japanese spent a lot of time trying to find this gold. A little more added myth is - - the Japanese moved masses of gold they had stolen in WWII over to the Philippines (think of the thousands of years of Chinese gold building up!). Supposedly this gold was lost and there may still be a mega horde just waiting to be found, enough to make the Philippines a rich nation. OR, and more likely, the US forces took it back to the USA. We did occupy the Philippines for a long time. Which is another twist in the story. The Germans melted down the Mega Load and hid it in a bunker - there are films of this gold. It was massive. I mean massive. Just piles and piles and piles of gold as far as the eye could see. All the gold went back to the USA after WWII (we also occupied Germany) and hence Happy Days are Here Again. By the 1970s the USA had blown through all this gold (supposedly) and so that was added incentive to decouple the dollar from the gold standard. Most of that gold is back in Asia.

    Interesting huh?

    Well, that's the way I heard it

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    Also, Japan does spend a lot of money on their military. I think they are fourth or fifth in the world. And they PAY for the US military. Something that has pissed off a lot of Japanese for a long time. You should see the size of some of these bases in Kanagawa. Huge.



    Lastly, now the US government is setting up a sheme to buy ALL of the bad debt?!? :wtf:
    That is going to make me so pissed off. Those institutions need to go bankrupt for their insolence and competence. Jesus H Christ where's the justice in all this?! The RICH get to party and little Joe American gets stuck with the f*cking bill again.... pure BullShit. I can not believe I'd see the day Republicans would support this BS. It's shocking. I swear we're living the book 1984 and in the middle of the pep rally the party have switched messages.
     
  15. Carcano Valued Senior Member

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    It shows us that Capitalism is fundamentally flawed. And the flaw has to do with SIZE!

    If its too risky for huge economic entities to be a in private hands then private hands should not be allowed to hold them.

    Officially the government is saying...'Yes we believe in private ownership...except when that ownership becomes so large and powerful that its failure would destroy us all.'

    There is no point in trusting capitalism ONLY when it succeeds.
     
  16. hypewaders Save Changes Registered Senior Member

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    Michael: "now the US government is setting up a [scheme] to buy ALL of the bad debt?!?"

    We are the bad-debt leaders of the world! We're #1! Can't touch this! USA! USA! USA! USA!...:yay:

    um, can I borrow another cuppla billion or two pleeeeez? Hashimoto? Yasin? Jun San? C'mon, guys!

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  17. one_raven God is a Chinese Whisper Valued Senior Member

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    And leave the existing management structure and policies that allowed the catastrophic failure in the first place?
    Not a good idea.
     
  18. nietzschefan Thread Killer Valued Senior Member

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    It's a 6month stay of execution for the whole HOUSE OF CARDS.
     
  19. CIEan Registered Member

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    Sorry, I was assuming that they would change the risk management policies when I asked about the loan. Won't it cost even more for tax payers if the government helps manage AIG? They have to help operate it. Its similar to the reason that private banks don't like to manage properties I guess.
    If AIG could have fixed their risk policies, then maybe all they would have needed was the loan. :shrug:
     
  20. one_raven God is a Chinese Whisper Valued Senior Member

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    I think it should be put into receivership and the policies sold off piecemeal or allowed to expire.
    That's what we used to do in the Department of Insurance.

    I don't see the benefit of allowing a failing company to continue to operate.
     
  21. Pandaemoni Valued Senior Member

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    "The company" is actually a huge collection of companies. AIG Financial Products is the albatross, for the most part, because it issued derivatives tied to the U.S. housing market.

    The insurance businesses, though, are profitable taken in isolation and in no risk whatsoever of failing to pay off on the policies they issued. They bear no risk from the credit default swaps and no liquidity issues that result from them. (The insurance companies alone have something like $27 billion in net assets to pay off claims that may arise.) The reason AIG was looking to take loans from those subs (actually they were looking to trade them illiquid assets for $20 billion in municipal bonds, but the press has been calling it "loans").

    AIG is in an odd position because they have a $24 billion "liability" for the swaps, but that amount is not the amount they expect to pay with respect to them, it's the amount of collateral they have to post in the form of cash. If they could unwind them, the $24 billion would be reduced without AIG needing to (necessarily) make a payment. It's a liquidity crisis, not a net worth issue.

    Liquidity issues can be unwound so long as there is time. Technically it is a classic bankruptcy reorganization situation. They likely will sell off a few subsidiaries to raise the cash needed under the swaps, but the swap contracts require payment within 2 to 10 days, and you can't close a merger in 2 to 10 days. They have far more in value in their subs (even excluding the insurance subs, which AIG will never sell) to meet their needs so long as they have time to sell and negotiate deal terms normally.
     
  22. Carcano Valued Senior Member

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    Thats why I thought the government made a profitable deal, as they were merely buying TIME for the company.

    Seems that AIG owns a whack of assets aside from financials. An airline leasing company with hundreds of Airbus planes, office buildings all over the world and so on. They just couldnt unload the peripherals in time, before going over a cliff.
     
  23. nietzschefan Thread Killer Valued Senior Member

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    It's profitable if those assets are actually "profitable". It might actually be the equivalent to swampland if everything goes to shit anyway.
     

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