Soon there may be nobody left to lend to America

[katty]

more:

http://business.timesonline.co.uk/tol/business/columnists/article5950258.ece?openComment=true

March 22, 2009

Soon there may be nobody left to lend to AmericaIrwin Stelzer

Anyone who thought Ben Bernanke and his Federal Reserve Board colleagues were out of ammunition received a rude, or pleasant, shock last week. Rude, if you worry that a few extra trillions sloshing around the economy might one day trigger a wave of inflation; pleasant, if you worry that the economy is sinking fast, and the Obama administration and Congress haven’t a clue what to do about it.

The Fed plans to buy $300 billion of Treasury IOUs in the next six months (more to come if needed), pour $1.45 trillion into the mortgage market, and keep interest rates close to zero for “an extended period”. There’s more in the Fed’s “do whatever it takes” arsenal if these steps don’t bring interest rates down so people can borrow more cheaply to buy houses, cars and other durable goods. But so far, so good: interest rates on 30-year mortgages fell below 5%. Whether that will encourage enough creditworthy borrowers to sop up the huge inventory of unsold homes, much less trigger new construction, is difficult to predict.

But the dollar dropped like a stone. Earlier, Chinese premier Wen Jiabao said he was “a little bit worried” that America might cheapen its currency and pay back the $1.2 trillion it owes in depreciated dollars. Now that the Fed has moved, he must be a lot worried.

[islandmkl]

1. to ask what is probably too simple a question::

what the hell happens if the USA just tells these countries holding our paper that "we can't pay"?

if the world economy is in general free-fall, and there is an inevitable 'conclusion' somewhere in the not-too-distant future, what mandates the 'making good' on all the debt?

for one thing, we know it won't be because 'it's the right thing to do'...that crap is all out the window...

want to guess where the Chinese got all the loot to 'lend' us....we sent industries and jobs to countries to:

1)achieve greater bottom-line results for the corporations involved

2)foment the growth of virtually non-existant middle classes in those nations, who have HUGE populations, providing an even greater future bottom-line growth for the corporations involved

...we have sent a great deal of our economy/money overseas, putting us in an ever-growing need to borrow back THAT MONEY to sustain our economy...

when the house of cards collapses, what will be left standing?

[katty]

2. we can't pay? I think they already know that