tag:blogger.com,1999:blog-1469531130099587588.post4499640079951999099..comments2023-06-05T16:26:27.079+02:00Comments on Miscellaneous economic ramblings: Global imbalances?Thomashttp://www.blogger.com/profile/05980127611042973278noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1469531130099587588.post-48255874441997100002009-03-05T19:17:00.000+01:002009-03-05T19:17:00.000+01:00I'm not quite sure why you are so bitter and aggre...I'm not quite sure why you are so bitter and aggressive regarding Brad. "Untouchable in the US establishment", "war-like views"? That's not quite the image I have of Brad Setser.<BR/><BR/>I noticed you posted comments on some other blogs, and apparently, some of them got deleted, and you seemed quite bitter about that. Maybe it's your somewhat aggressive approach. For example, Pettis doesn't come across as a guy who blocks your access to his site for no reason. I've disagreed with him numerous times, and he always responded to my comments, and never deleted anything I've written.<BR/><BR/>Anyway, I don't think China will stop buying US treasuries any time soon. It's not in China's interest to do so. And I don't think a US sovereign default is on the cards. If they're not careful, they will have a huge inflationary problem a few years down the road, but an outright "sovereign default" is pretty much impossible as long as their debt is denominated in US$.Thomashttps://www.blogger.com/profile/05980127611042973278noreply@blogger.comtag:blogger.com,1999:blog-1469531130099587588.post-31606635659171280872009-03-04T20:27:00.000+01:002009-03-04T20:27:00.000+01:00The global imbalance theory is just good old trade...The global imbalance theory is just good old trade protectionism in a new, highly sophisticated, golder collar studded, blue-suited, balance-of-payments think tank disguise. <BR/>Those theorists know your points above about the US never having been forced to borrow and invest only in houses, with no rules or regulations about who can borrow how much very well.<BR/>They're just making this story up to blame China for their excess consumption, and advocating schemes by which they can ban imports from China and try to increase local employment through import substitution. If their proposals, notably those of Brad Setser, are accepted, soon the US will go into an external financing crisis and there will be a sovereign default in the US.<BR/>The following are sustaining the US dollar externally:US banks' inability to roll over debts, and US institutional investors being forced to fire-sell their foreign equity holdings to meet domestic solvency crisis in the US. Apart from this, China's central bank demand for Us treasuries. The first two will break down as the credit crisis eases. If the third, most important, also breaks up, then expect the US to default pretty soon.<BR/>But as of now Brad Setser is almost an untouchable in the US establishment because of his war-like, protectionist views against China. So the Us has bought some time, during which it needs to reduce dependence on imported oil, and try to stabilize local demand, etc to be able to reduce the impact of a more severe crisis that is likely in a few years.Indian Investorhttps://www.blogger.com/profile/17573660403834168695noreply@blogger.com