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U.S. Isn't Broke, Dollar Won't Collapse (Paul Ashworth)


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#1 concert andy

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Posted 09 April 2013 - 01:04 PM

The U.S. isn't broke, and the dollar isn't in danger of collapse, according to Capital Economics Ltd.
 
Taking into account total domestic assets and liabilities, the U.S. economy's overall net worth is about 550 percent of gross domestic product in 2011, Paul Ashworth, the chief U.S. economist at Capital Economics, wrote in a research note. That compares with official figures showing U.S. GDP at close to $15 trillion, while national debt has ballooned to $16.8 trillion after nearly tripling since 2001.
 
"At first glance it does appear that America is caught in some sort of debt super cycle," Toronto-basedAshworth wrote yesterday. After accounting for increases in domestic asset values "the rise in credit market debt and total financial liabilities does not look particularly egregious."
 
The U.S. Federal Reserve holds 16 percent of total Treasuries outstanding. China is the biggest foreign holder at 11 percent, followed by Japan at 10 percent.
 
The U.S. isn't deeply in debt to other nations, according to Ashworth. Taking into account U.S. holdings of foreign bonds and cross-country holdings of other types of assets, net external liabilities are a "fairly modest" 30 percent of GDP, he said in the report.
 
"Under these circumstances, there is little danger of a collapse in the dollar or a spike in long-term interest rates," he wrote.
 
The dollar fell 0.3 percent to $1.3048 per euro as of 12:49 p.m. in Tokyo after reaching $1.3068, the least since March 15. Treasury 10-year yields were little changed at 1.75 percent, close to a four-month low.


#2 TakeAStepBack

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Posted 09 April 2013 - 01:13 PM

:lol:



#3 seany

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Posted 09 April 2013 - 01:19 PM

We look pretty good now given the tanked Euro. :lol:  Of course, some would argue that we implement the same austerity measures that helped tank the Euro... :dunno:



#4 TakeAStepBack

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Posted 09 April 2013 - 01:25 PM

What austerity? :lol:



#5 concert andy

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Posted 09 April 2013 - 01:27 PM

Was it the Economist or the opinion of the entire concept?



#6 TakeAStepBack

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Posted 09 April 2013 - 01:29 PM

http://www.huffingto...hp_ref=business

 

Paul Krugman and David Stockman battled it out Sunday morning during an appearance on “This Week with George Stephanopoulos.”

Though there was plenty for the two to spar over, one particularly heated exchange came during a discussion of the Federal Reserve’s policy of using super-low interest rates to boost the economy. Fed Chairman Ben Bernanke stood by the stimulus plan last month, saying that the Fed would keep interest rates at rock-bottom levels until unemployment dropped to at least 6.5 percent.

“The main thing we’re doing is not working, and that is the serial bubble machine coming out of the Federal Reserve,” Stockman, an ex-budget director for Ronald Reagan, said on “This Week,” arguing that the easy money policies are helping Wall Street at the expense of Main Street. “Zero interest rates are crucifying the savers of America.”

Krugman, a Nobel Prize-winning economist and New York Times columnist, responded by asking Stockman: “You really think we should be raising interest rates with high unemployment?”

The jobless rate fell to 7.6 percent in March as employers hired at the slowest pace in nearly a year, the Labor Department reported Friday.

The exchange was just the latest in a battle between the two that began last week after Stockman -- who resigned from Reagan’s administration in 1985 in protest over deficit policies -- published an op-ed in The NYT highlighting the themes of his new book “The Great Deformation: The Corruption Of Capitalism In America.” The controversial title argues that America’s ballooning debt as well as government monetary and fiscal policies are putting the nation in danger of another financial meltdown.

Krugman criticized the op-ed, calling Stockman a “cranky old man,” and referring to the piece as “just a series of gee-whiz, context- and model-free numbers embedded in a rant -- and not even an interesting rant.” Krugman wasn’t the only one to slam Stockman’s analysis, as he noted later in the week: “It turns out that I’ve actually been polite to David Stockman,” compared to other critics.



#7 TakeAStepBack

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Posted 09 April 2013 - 01:31 PM

I love the fluffers technique. Present Krugman as "a nobel winning economist" in order to try and secure him as some sort of authority. In reality, he's no expert, or even remotely sane, regarding macro-econ. He won his Nobel off trade theories and Nobel winning macro-economists completely disagree with Krugman. Then of course, his only recourse in argument rears its head.



#8 TakeAStepBack

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Posted 09 April 2013 - 01:35 PM

Was it the Economist or the opinion of the entire concept?

 

The concept is rooted in the same old drivel we've heard for years and years. The point is, and has been, that manipulating interest rates and money printing techniques of the federal reserve cause the business cycle. Sure, things are just "great" if you're a debt slave and wish to continue borrowing money. But these policies hose finanically responsible savers and those on fixed incomes. Then of course, there is the reality that interest rates can not be held low forever, adn when they are raised, another "recession" is imminent. This policy eventually hits the bottom, whether or not these economists want to admit it.



#9 Tim the Beek

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Posted 09 April 2013 - 01:54 PM

Krugman criticized the op-ed, calling Stockman a “cranky old man,”

 

That's a Grade A bit of arrogant douchery right there...



#10 concert andy

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Posted 09 April 2013 - 02:01 PM

The concept is rooted in the same old drivel we've heard for years and years. The point is, and has been, that manipulating interest rates and money printing techniques of the federal reserve cause the business cycle. Sure, things are just "great" if you're a debt slave and wish to continue borrowing money. But these policies hose finanically responsible savers and those on fixed incomes. Then of course, there is the reality that interest rates can not be held low forever, adn when they are raised, another "recession" is imminent. This policy eventually hits the bottom, whether or not these economists want to admit it.

 

 

I wasnt sure if this was one of those "Economists" that spew crap like Krugman...

 

Hence asking if it was the person or the opinion.



#11 TakeAStepBack

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Posted 09 April 2013 - 02:03 PM

I'm sure based on his education and the modeling, he believes what he says. And can probably provide a decent array of math to back up his assertions. But alas, he misses the point of our concerns entirely.