U.S. Faces Global Funding Crisis, Warns Merrill Lynch
July 16th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
In a recent comment, I wrote:
It’s pretty clear that the Fed is more interested in selling out the dollar over time than letting the whole thing come crashing down all at once. They could have just let Freddie and Fannie fail, which would have resulted in soldiers on the streets, martial law, overt collapse, etc. But they didn’t. And, for whatever reason, the Asians and a few others continue to buy U.S. debt.
When the U.S. paper auctions fail, that will indicate that we’re into a very different—much more dire—phase.
Well… What’s the smack worth?
Via: Telegraph:
Merrill Lynch has warned that the United States could face a foreign “financing crisis” within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.
The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.
“Japan was able to cut its interest rates to zero,” said Alex Patelis, Merrill’s head of international economics.
“It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies.”
Brian Bethune, chief financial economist at Global Insight, said the US Treasury had two or three days to put real money behind its rescue plan for Fannie and Freddie or face a dangerous crisis that could spiral out of control.
“This is not the time for policy-makers to underestimate, once again, the systemic risks to the financial system and the huge damage this would impose on the economy. Bold, aggressive action is needed, and needed now,” he said.
Mr Bethune said the Treasury would have to inject up $20bn in fresh capital. This in turn might draw in a further $20bn in private money. Funds on this scale would be enough to see the two agencies through any scenario short of a meltdown in the US prime property market.
Richard Cooke is a genius.
http://www.globalresearch.ca/index.php?context=va&aid=9596
Status Report on the Collapse of the U.S. Economy
What is taking place is not just the collapse of the U.S. , but more than likely the final crash of Western civilization, since we are the last of the world empires to go down the drain. World War I saw the end of the German, Austro-Hungarian, Russian, and Ottoman empires. World War II saw the disappearance of the French, British, Japanese, and Italian empires, along with Nazi Germany. The Soviet empire collapsed in 1991. The American is next. The danger is that we may lash out and start a nuclear World War III out of frustration and to appease the elitists of the world who see war and famine as their pathway to world control. Such a war would also mean a military takeover domestically to manage the pathetically weak nation that we are becoming.
“The danger is that we may lash out and start a nuclear World War III out of frustration and to appease the elitists of the world who see war and famine as their pathway to world control. Such a war would also mean a military takeover domestically to manage the pathetically weak nation that we are becoming.”
And all we need is another “catastrophic and catalyzing event” to kick it off! As easy as baking a cake…
While I remain open to the possibility that the bush admin will blow-up Houston or something, I think the more likely scenario is another bubble in renewable energy, followed by a bubble in the AI/Nanotech/BCI economy. It’s what’s most profitable to the widest swath of elites, reckless petrowars have proven to have a poor return on investment.
@GK: The British Empire still exists and you live in it.