The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.
Global investors see little reason to own U.S. financial assets with the two-year Treasury yielding 1.28 percent today, or 1.97 percentage points less than similar-maturity German bunds. The gap is the widest since September 1993. Foreign purchases of U.S. financial assets slowed in each of the final three months of 2007, to a net $56.5 billion from $113.9 billion, according to the latest Treasury Department data.
As the currency fell, the UBS Bloomberg Constant Maturity Commodity Index of 26 commodities ranging from energy, metals, agriculture and live stock rose 43 percent in the past 12 months, the biggest increase since the index’s inception in 1998. The price of a barrel of crude oil surged 96 percent in a year to an all-time high of $111.80 today.
If the Debacle in Iraq doesn’t bankrupt us, the financial geniuses will…
We’ll be even worse off if we don’t manage to put a lid on oil prices.
BZ
No bailouts.
Japan had its meltdown and the reason it took a decade to recover was due to the government deciding to hold bad loans. The net result was lack of liquidity in the market and inability to get the bad actors out. If you hear ‘bailout’ or anything like it, this will be a *reward* for bad economic decisions. And after looking at international banking there needs to be a clear-out globally of bad actors. You won’t get that with government buyouts, payoffs, bailouts and the such.
Remember Chrysler? Bailout kept it American, right? What’s that? Daimler-Chrysler? Hmmmmm… what was that about ‘delaying the inevitable’?
And I thought ‘free trade’ was supposed to be a cure for all of these ills… it sure did help de-industrialize America and next it will help get us out of the banking sector. Soon enough we will be an agrarian, uneducated, poor Nation while we export good jobs and use our schools to remove good sense.
Good job!
Thank you to the two party system.
For Nothing.
I agree with A Jacksonian about bailouts. They shouldn’t happen, and it should be either sink or swim. Up here we have been paying for losing companies in Queerbec for decades, and it hasn’t done squat, except increase taxes.
As for free trade, I’m not so sure. We don’t have a free trade agreement with China, yet they are destroying us. We have a free trade agreement with the USA, and our manufacturers out east are shut down, or are in trouble. Our wages, dollar, and cost of living is higher then yours, so how is the idea of scraping NAFTA going to help your manufacturing sector?…Is it gonna employ 3 more people for another 6 months?.. Go ahead and scrap it…. it would make very little difference currently.
Believe what you want, but this problem is not limited to your back yard. It’s a North American problem. Intentional? ….. Maybe… who’s behind it? ..the answer is probably in who holds most of the foreign assets….
I concur with AJ and ABF — there’s a reason it’s called a Free Market Economy. No bailout for banks, DC, any other entity. Nor for the individuals silly enough to think they could get a 30 year fixed for 5.0%, no points, up to $750K on the $38,000/year incomes.
BZ
Bailouts…
I know you’re a rail road buff, how many times has the Fed bailed out the rails??
And they won’t lift a hand to help trucking…
Just sayin’…
TF: the freight railroads were regulated (since 1887), and only de-regulated via the Staggers Act of 1980. The way the rails are going these days, what with their abysmal treatment of customers, I shouldn’t be surprised if the halls of Congress are overhearing whispers of RE-regulation.
The bailout you’re thinking of involves the National Railroad Passenger Corporation: what people think of as Amtrak, a massively money-losing proposition (works in ONLY the Northeast Corridor); and yes, Amtrak HAS had millions of dollars thrown at it over the year; its equipment and infrastructure are deteriorating at an unprecedented pace. Freight makes cash; passengers don’t.
BZ
What is there to instill confidence in investors? either foreign or domestic? not much, the Euro looks a lot better than the dollar, those crazy-ass Americans are going to elect either a socialist or the most liberal republican senator as president. there is absolutely no indication America won’t spend itself into oblivion as most are demanding ever more free shit from the government, refuse to deal with over-priced energy, and ABSOLUTELY refuse to be fiscally responsible either publicly or privately.
ABF – ‘Free Trade’ is the conduit by which jobs went first way south, to Mexico, and then to the Far East, to China, as shoddy work, low wages, low living standards, lack of environmental controls, and lack of quality control allowed to defray shipping costs. Reading up on Huawei reveals its associations with Saddam and the Taliban: the former for ‘market’ the latter to buy off Islamicists who were infiltrating into China to kill folks. Huawei itself, being a part of the PLA, is not above bribery, corruption, misleading contracts and such minor things as blackmail of foreign officials. *Come on over and visit Huawei, see the sights with a beautiful hostess and then see those incriminating snaps on your bed with a contract attached.*
After the put down of the student uprising very few political ‘leaders’ would actually back shutting down trade with China to show displeasure. It’s ‘market’ was too ‘valuable’, you see… ‘trade’ would fix all of that, just like President Woodrow Wilson put forth for the Middle East in 1917. I find the purely nation-state views of classical economists incredibly distorted by transnationalists on the *Right* to justify ‘free trade’.
So when you hear that ‘sucking sound’ of jobs going East to China, remember that it is based on an unproven and, indeed, counter-factual theory that does not rest in this real, everyday world. And if the Left thought that local, national companies based within their home nations were ‘bad’, they have not seen how Huawei and its Chinese cohorts work, and are assisted by a number of international banks and monetary institutions to further erode the stability of the very nations losing industrial capacity to these lovely, nebulous, low pay-back ‘markets’ like China. It is hard to get by in Canada without connections to the Desmarais family and Power Corp. and they are, intimately, part of that cooperative network.
AJ – Yes, very familiar with Desmarais and Power Corp. Desmarais is based out of Fwaaaaance with huge tentacles in Queerbec, but they’ve had a primary shift on where they are going to base their power. As you know, Maurice Strong is part of that group. The architect of Kyoto, and oil for food at the UN, and is on the board of the Chicago Carbon Exchange with associations with Gore. He is now, and has been in China for a long time, where he now lives, and has been pulling a lot of strings from that country.
That whole group, and family, has been distancing itself from Canada for about the last decade, and slowly cutting ties, and moving them to China, and the UN. If there were ever a threat to society as a whole, it’s that group of people. Who, by the way, think the world population has to be reduced by about 75%, and with the pending food shortages, due to biofuels coming, may be well on that road.