US May Face 'Armageddon' If China, Japan Don't Buy Debt

[keaggy220]

Probably the best thing that could happen to us.

US May Face 'Armageddon' If China, Japan Don't Buy Debt
ECONOMY, BONDS, CHINA, JAPAN, DEBT,
Posted By: JeeYeon Park | News Associate
CNBC.com
| 24 Sep 2009 | 05:22 PM ET

The US is too dependent on Japan and China buying up the country's debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC.

"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."

Robertson said inflation is a big risk if foreign countries were to stop buying bonds.

“If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent,” he said. “It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”

Robertson said while he doesn’t think the Chinese will stop buying US bonds, the Japanese may eventually be forced to sell some of their long-term bonds.

“That's much worse than not buying,” he said. “The other thing is, they're buying almost exclusively short-term debt. And that's what we are offering, because we can't sell the long-term debt. And you know, the history has been that people who borrow short term really get burned.”

The only way to avoid the problem, he said, is to "grow and save our way out of it."

"The U.S. has to quit spending, cut back, start saving, and scale backward," Robertson said. "Until that happens, I don't think we're anywhere near out of the woods.”

Robertson is not very optimistic about the short-term.

“We're in for some real rough sledding,” he said. “ I really do think the recession is at least temporarily over. But we haven't addressed so many of our problems and we are borrowing so much money that we can't possibly pay it back, unless the Chinese and Japanese buy our bonds.”

http://www.cnbc.com/id/33004753

[living_stradivarius]

Hmm maybe I should dump a good portion of my $ for yuan.

[keaggy220]

Hmm maybe I should dump a good portion of my $ for yuan.

It is amazing that our obsession with big ticket liberal programs, i.e. Medicare and Social Security, has almost single-handedly left us at the mercy of Japan and China.

[Cyril Ignatius]

Hmm maybe I should dump a good portion of my $ for yuan.

It is amazing that our obsession with big ticket liberal programs, i.e. Medicare and Social Security, has almost single-handedly left us at the mercy of Japan and China.

Yes, true enough. Although I would add our international military overreach, and our bowing too much to global capitalism at the expensive of national sovereignty. We are a society increasingly unable to recognize boundaries. We are a society lacking self control. Societies like this don't remain free for long. This is what the secular-progressives cannot or will not recognize - until it is too late.

Being under China's thumb is guaranteed to be an unpleasant experience.

[living_stradivarius]

Although I would add our international military overreach, and our bowing too much to global capitalism at the expensive of national sovereignty.

I cannot agree with your extension of the original analysis. They reason we are "bowing" to global capitalism is because we cannot keep up in terms of overall productivity (due to non-fluidity of labor, lack of innovation/open mindedness to markets, and taking the status quo for granted). What we need to do is to roll with the punches instead of stupidly bearing them straight-on. What's your alternative? Protectionism?

[Cyril Ignatius]

Although I would add our international military overreach, and our bowing too much to global capitalism at the expensive of national sovereignty.

I cannot agree with your extension of the original analysis. They reason we are "bowing" to global capitalism is because we cannot keep up in terms of overall productivity (due to non-fluidity of labor, lack of innovation/open mindedness to markets, and taking the status quo for granted). What we need to do is to roll with the punches instead of stupidly bearing them straight-on. What's your alternative? Protectionism?

The free market is the best overall manner of economic organization. Yet we are a sovereign nation. And some of our sovereignty is related to having some measure of control over our economy. The economic, and sovereignty costs of explosive budgets deficit spending are very real. So too are the sovereignty costs of simply rolling over into mindless global capitalism. We are a republic, and our values and traditions are not those of China and a number of other countries, and thank God Almighty for that. We are the world's last best hope as Bill Bennett and others have put it so well. We must be prepared to establish that point where even free market ideals must stop short of getting into agreements that undermine that sovereignty. Give away your sovereignty and you will have a dog fight in ever getting it back. Bush was too much of a globalist, especially in his second term. Obama is much, much worse. Clinton was bad. We need new leadership.

We are not America, Inc. And we aren't The World, the sentiment of that popular song notwithstanding. We are a republic, a nation. Despite the unpopularity of that thought among many of the elite, it's a great thing, and it isn't for sale. We have a constitution and a tradition of governance, that at least at it's better moments recognizes that while we are in the world and in various ways may see fit to help some nation or make some agreement with another nation, we are also a nation apart. We have to remember that, now more than ever.

Keeping our distance from an evil regime like China is wise counsel.

[living_stradivarius]

Give away your sovereignty and you will have a dog fight in ever getting it back.

Sovereignty in what sectors/markets? Be specific.

[Cyril Ignatius]

Give away your sovereignty and you will have a dog fight in ever getting it back.

Sovereignty in what sectors/markets? Be specific.

Sadly, my time is far too limited for a dissertation here, but sovereignty in whatever sectors it can reasonably be achieved.

[living_stradivarius]

Give away your sovereignty and you will have a dog fight in ever getting it back.

Sovereignty in what sectors/markets? Be specific.

Sadly, my time is far too limited for a dissertation here, but sovereignty in whatever sectors it can reasonably be achieved.

Way too vague. Same kind of method the Obama camp is using to push its budget proposals. Will wait for your clarification when you have time.