Three important issues are discussed in this video of Larry Kudlow's Interview with Daniel Yergin, author of "The Prize".
First, Europe is telling Timothy Geithner, the US Treasury Secretary that they aren't going to spend more money on Economic Stimulus, as Europe braces itself for the worst economic recession it is going to face in many decades. China has also said the same thing, and thus, the World is watching what the US is going to do.
Obviously, the World thinks that there needs to be some form of accountability, i.e. sooner or later, somebody is going to have to pay for all the money spent, and thus, the World is not going overboard with Economic Stimulus Packages, and some, possibly China, are even asking the US to reduce the amount of such measures.
This is the 2nd Issue, i.e. "Does China trust US Treasuries?" The US Government officials argue that US Treasuries are the safest investment in the world, while the World watch with a quesy feeling as the US simply prints more and more US Dollar while maintaining the FOMC Interest Rate, which is the Price of Money of the US$, at a ridiculous level of 0.25% p.a. when the World Banking System is struggling, and reeling from a liquidity crisis. The low FOMC Interest Rate is artificial and Government motivated, versus a free market situation.
The question is whether the World will accept this US Government Policy and continue to hold US Treasuries for the long term.
In my opinion, it looks like a spanner has been thrown into the Obama Plan on Economic Stimulus and the need to print an additional US$3 trillion this year, which I had highlighted would be the case. much earlier.
First, Europe is telling Timothy Geithner, the US Treasury Secretary that they aren't going to spend more money on Economic Stimulus, as Europe braces itself for the worst economic recession it is going to face in many decades. China has also said the same thing, and thus, the World is watching what the US is going to do.
Obviously, the World thinks that there needs to be some form of accountability, i.e. sooner or later, somebody is going to have to pay for all the money spent, and thus, the World is not going overboard with Economic Stimulus Packages, and some, possibly China, are even asking the US to reduce the amount of such measures.
This is the 2nd Issue, i.e. "Does China trust US Treasuries?" The US Government officials argue that US Treasuries are the safest investment in the world, while the World watch with a quesy feeling as the US simply prints more and more US Dollar while maintaining the FOMC Interest Rate, which is the Price of Money of the US$, at a ridiculous level of 0.25% p.a. when the World Banking System is struggling, and reeling from a liquidity crisis. The low FOMC Interest Rate is artificial and Government motivated, versus a free market situation.
The question is whether the World will accept this US Government Policy and continue to hold US Treasuries for the long term.
In my opinion, it looks like a spanner has been thrown into the Obama Plan on Economic Stimulus and the need to print an additional US$3 trillion this year, which I had highlighted would be the case. much earlier.
The 3rd issue discussed is the simple but important question, "Has Oil Price bottomed?" However, I am not clear on the answer to this question.
Best wishes,
Ooi
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