Thank you very much Europe, Latin America, Asia, we appreciate our assets back, at discounted values.
When they are sky high again, y’all come back now, and buy them again.
Boy this game is so much fun.
Of course, American investors overseas do just as stupid knee jeerk reaction things as well...
If you remember anything tonight, let it be the following.
Right now, the world has the lowest allocation of their money in the US market in modern history. Also, Americans have their highest allocation in International, in history of modern econ.
When this folly is exposed, the US market is going to go up in value, dramatically.
Put these together and you’d have to be sniffing glue to post what you did.
Foreign investments have been financing our house of cards. Without those investments, who will?
Quite naive to believe that these assets “come and go” - once investors got their money back they wouldn’t dig it in the back yard.
The money will be going to work elsewhere.
I understand very little of all this, but I do know that the US government is spending like there’s no tomorrow. What happens when Medicare and Social Security go belly up? Don’t we have a gazillion dollars in unfunded liabilities hanging out there? And the wars in Iraq and Afghanistan are not cheap, either. Even if they were to end soon (highly doubtful), we will still have the cost of replenishing equipment and treating wounded veterans for years.
Where is all the money for this going to come from?
Problem for the reader: what is the real rate of return in Euro's on a US bond that pays 5.675% interest per annum, when the US$ depreciates at 4% per annum, 6% per annum, 10% per annum, and inflatin in Europe is running at 2.35% per annum?
hint: all answers are less than zero. The highest is a 6.75% per annum depreciation in real asset value.
That is why they are dumping the turkeys as fast as the can. In fact the higher quality the debt, the lower the interest rate and the larger the guaranteed rate of loss.
There are going to be a lot of really angry European pensioners in years to come when they discover that their pension funds purchased a lot of this S&P AAA rated crap.
Carolyn