The million dollar question

Via Megan McArdle.

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May 28, 2010 - Posted by US | economics

3 Comments »

M.h.t. pointen om at det går godt i USA fordi de ejes af Kina:

http://www.foreignpolicy.com/articles/2009/07/23/the_china_bubbles_coming_but_not_the_one_you_think

Comment by WilliamJansen | May 28, 2010 | Reply
@William:

Fint link, tak for det, også selvom ikke meget af det er helt nyt for mig (jeg har længe ment, at de kinesiske vækstrater ikke var holdbare på langt sigt og har så i øvrigt også hele tiden stillet spørgsmålstegn ved de officielle kinesiske tal for både vækst, beskæftigelse, inflation og hvad de så ellers måtte opgive tal for…).

Kina er USA’s største kreditor, og sammen med Japan holder de ca. 44 procent af den amerikanske udlandsgæld. Altså næsten halvdelen. Men det er stadig lidt fjollet at sige, at ‘Kina ejer USA’ eller noget i den stil; det er trods alt under en tiendedel af den amerikanske statsgæld, der holdes af kineserne.

Comment by US | May 28, 2010 | Reply
The whole Keynesian shell-game is coming to an end – the proverbial long-term (the one in which we are all dead) has arrived in some places (e.g. Greece), and is at the doorstep in many others, including broader Europe and the US. Yet, this game is so beneficial for governments that they will keep playing it to the last possible moment; for an example, look here and here how Spain’s minister of economy and finance, Elena Salgado, describes the pickle Spain is in, and what they are doing about it. In a nutshell, we are not in as bad a shape as our neighbors (gee, that’s great!), we need to restructure finance, and to do that, we are giving more money to lend to the banks who are broke because they lent too much to the wrong borrowers to begin with. The background of this is that Spain has 20% unemployment. So, by this woman’s logic and Keynesian dogma, if Spain were not cutting deficit from 11.2 to 6% next year, Spanish GDP would have been growing at about 4%. Really, with 20% unemployment? Of course, that’s easily possible when they count the government’s taking money from Juan and giving it to Jose as unemployment benefits as part of GDP. By the same logic I can increase my wealth by moving change from one pocket of my pants to the other.

I cannot decide which is scarier – (a) the possibility that Ms. Salgado does not realize the absurdity of this, or (b) the possibility that she does and does it anyway. Ms. Salgado is not the exception, either. This is the mantra of pretty much any government these days.

Being a proud pessimist, I believe there are politicians of both (a) and (b) varieties, and that the combination is worse than either one standalone. Most of the elected representatives are idiots, who cannot tell pari passu from tiramisu, and vote for what re-elects them; the “experts” of the (b) ilk tell the first bunch that what re-elects is more debt, gov’t spending, taxes, and regulations.

Busted entitlements plus inverted demographics will transform the world in our lifetime – in fact, they already are. I personally would not be long any gov’t debt with any of my money I can control. Of course, that means that if/when enough people think like me, the gov’t will take away most of my money (for my benefit, of course!) and replace it with gov’t debt. It’s happened before (see Argentina), and it will happen again.

Comment by Plamus | May 30, 2010 | Reply