[Marxism] Are we facing the mother of all bubbles?

S. Artesian sartesian at earthlink.net
Sat Mar 7 10:15:07 MST 2009


Well, the situation is a bit more complicated than that.

I don't think the US Treasury is simply "crowding out" other sovereign debt 
issuers so much as the flight to safety favors, temporarily, the US Treasury 
instruments, until such time as accruing losses in revenues, losses on bank 
guarantees, etc. make it difficult for the US to finance and refinance its 
debt service-- which is why the Fed needs to buy  Treasury instruments, in a 
hurry, and a big way.  It's also why the govt. ought to, from its owns 
standpoint as a "business entity" seize the banks etc.  But anyway..

Certainly, purchases of US Treasury instruments by "foreign" sources has 
increased, and dramatically.  According the FRB's flow of funds report 
[available on the Fed website],  table F.107, such purchase for the first 3 
quarters of 2008 [last FoF report was made in December 2008] is triple the 
amount for the first 3 quarters of 2007.

However, purchases of ALL US financial assets by foreign sources declined by 
50% when comparing the same time periods.

In addition, purchases of US govt agency and GSE debt [FNMA, FMAC]  fell 
dramatically  in the first 3 quarters and may show a net redemption for the 
entire year 2008.

Advantage still goes to the US, to its Treasury issues, but as export 
earnings decline for Brazil, China, Russia, Japan, EU-- I think Treasury is 
going to run into a some problems with re-financing, with recycling its 
debt.

----- Original Message ----- 
From: "Lüko Willms" <lueko.willms at t-online.de>
To: "Les Schaffer" <schaffer at optonline.net>
Sent: Saturday, March 07, 2009 1:05 AM
Subject: Re: [Marxism] Are we facing the mother of all bubbles?


>>  I disagree. The USA is issuing government bonds amounting to many
> hundredthousands of millions of USD for all the bank bailouts, and 
> somebody
> has to shell out their good money for those bonds. And that somebody is 
> the
> world. So the flow of money into the USofA is increasing.
>
>  The richer imperialist nations try to solve the world economic crisis on 
> the
> back of the poorer nations.
>
>  On the other hand, the USD/EUR exchange rate moves ina reverse
> proportion to the price of oil.
>
>
> Comradely yours,
> Lüko Willms
> Frankfurt, Germany





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