The American National Debt - Breakdown of the American Grand Narrative
Most of us have been struggling to get a handle on the implications of the growing American national debt and the falling dollar. I am going to take a stab at fleshing out the most obvious consequence of this mess - the collapse of the American grand narrative.Very briefly - the American grand narrative states that people came to America seeking refuge from persecution. After coming to America, they found a land that offered opportunties for advancement and throught their hard work and perseverance they built up wealth and left behind a better life for their children and grand children.
Unfortunately with a 10 trillion dollar debt and a collapsing dollar on the international currency market - that is no longer possible. Instead of doing well and building up wealth - the current generation of Americans are leaving their children and grand children mountains of unpaid bills and debt obligations. It is unclear if their descendants will ever be able to pay these off. Should the US hit upon some revolutionary technology that the world simply cannot do without - then quite possibly a careful marketing of this technology may service some portion of the international debt - but it seems unlikely that such a technology will be able to pay a debt of this size off or even wipe out the internal portion of this debt.
Developing such technology will require manpower. This will cost money - i.e. investment. However most R&D manpower in the US is currently tied up in developing weapons or servicing existing ones. As an outward projection of military strength is necessary for the US to maintain its economic reliance on global resource channels and access to global markets - it seems unlikely to me that the US will be able to retrench manpower from weapons R&D to civilian R&D very rapidly. This is ofcourse ignoring a vast number of specific issues - eg. personal debt obligations, entitlement attitudes, etc... in the American workforce that often contribute to its high price. Those are beyond my ability to comment upon.
In the absence of local manpower, the US will have to rely on imported manpower. Again leaving aside the loss of status problems faced by US "bhoomiputras" due to such an import of manpower - for anyone to leave his or her homeland to come work in the US - the US has to appear attractive. The person coming here has to buy into the US grand narrative - and if that collapses the US will no longer seem the land of opportunity to people doing research and development. I am ofcourse ignoring the fact that the US has traditionally sought to filter out foreigners entering its economy - even the R&D types, but with the economy steadily slipping into a hole - I think this attitude will shift. I note among other things the shift of Microsoft Corporation to Canada - I don't know of anyone in congress who can ignore that.
Assuming that a source of manpower exists - can the US generate investment to develop the high technologies it needs. That question does not have a simple answer. Traditionally the US has led the world in innovation cycle times. If you have an idea and it looks like it works, the time required to turn it into a mass produced item is the lowest in the US. However the flip side of this is that the low innovation cycle time has led to a great number of bad ideas being put into production too - most American cars being an excellent example. In fact some observers argue that the American desire to push through innovation often overpowers their ability to think its overall viability through. It is the "will give an arm and leg to gain a extra thumb" philosophy. The end result is often a very expensive innovation cycle.
I remain somewhat skeptical of the US ability to generate funds for this kind of innovation. I think between the dollar falling and the pressure to reduce taxation, the viability of an kind of investment in a treasury bond type financial instrument will diminish too rapidly for most investors' liking.
Put simply, at the present time the American economy has to shift to a new equilibrium between the flows of resources, financial instruments and finished products. This is hard even for super agile populations like India and China. For something as ungainly as the US economy - frankly speaking - this going to be very hard - it is not going to be pretty or smooth.
I do not envy the person who sits in the chair after the incumbent. They are going to haul a enormous amount of shit.
posted by maverick @ 6:02 AM
14 Comments:
Hi Maverick:
I'd be very careful in assuming that the current crisis is going to undermine the US' long term economic position.
I simply can't see the losses as being unmanageable.
The heart of this issue is the fact that the US' corporate structures are doing extremely well while it's financial structure is in serious trouble.
But those problems by themselves are not, IMO, serious enough to warrant a re-evaluation of US dominance in the international arena.
The US has been through this before - specifically during the S&L crisis. They got through that by setting up a trust corporation that took over the S&L assets. By the time the Trust was wound up in the mid-90s, the trust had recovered some 90% plus of losses - about 2 odd trillion in todays dollars.
And the US economy is better placed now than it was then.
The unbelievable mismanagement of the US economy by the Dubya and the other bozos will be repaired without any major dislocation because the US Corporate economy is humming. Look at GE's overseas earnings for example.
I think it would be a serious error to extrapolate the current difficulties in the Anglo-US financial system to other areas of their economic power.
They will force the rest of the world, the Arabs in particular, to pay for their mess.
But I agree that the US' position will slip for a while. They're in the perfect storm currently, with deflation and inflation occuring simulataneously - deflation in assets and the damage to capital that does, and inflation in goods arising from the mad printing of dollars like it's going out of fashion.
On the upside - the slide in the dollar will make US debts easier to pay of for them - while the rest of the world stews at the con-job they're forced to live with.
The US' main problem is to repair the credit trust chain by fixing up bank balance sheets. i.e. The GoTUS simply has to arrange a capital transfer as cheaply as possible to their main banks.
This is by no means undoable. It's not even all that difficult once Dubya's left and the polarisation he induces weakens enough for the US system to get back on track.
Nor do I think that the US will fall behind on major tech - on the two main tech areas of nanotechnology and biotechnology, they're not slipping in either funding or advances to anyone else so far. (Although in biotech they have the christian fundoos hanging over them).
The US is in serious financial sh!te at the moment. But it's a passing phase. It is however an opportunistic time for the rest of us.
The real question, IMO, is how much we, the Chinese, the Russians etc, can take advantage of the situation, i.e. *permanently* narrow the gap between us and the US, before the US starts picking up speed again.
kg.
Hi Kg,
You are correct that they can try to sell the debt one more time.. they might even succeed like Ken Lay did for a while. I agree there is a chance they will find investors. So honestly, I am only really forecasting an end to the US monopoly over the "feel good" factor right now.
I am not in a position really to really make any deeper economic predictions but frankly even in my limited understanding this does not look good.
I don't know if this is unmanageable, but this is certainly going to be hard work to simply manage the short term problems - the long term we are only barely beginning to see.
I think the US model does not revolve around actually repaying its debts but rather accumulating it and then selling it using current economic performance as an advertisement for its economic success. Your point about GE's numbers is well made. I see this is as basically being a propaganda game - effected by a large number macroeconomic feel good numbers and indices which are maintained by pliable agencies. This economic mirage is literally as thin as the paper on which corporate profit statements are printed.
With energy inefficiency at epidemic proportions in the US economy and mainstream attitudes lagging the economic reality by a decade or so - I fear the path to real economic recovery is a very hard one. It is going to be a while before US corporate sector's real profits i.e. profits normalised to oil costs - can be seen to grow. The mirage of growth will be unsustainable and this will affect investment.
There is already a severe investment crunch inside the US. Although the real estate sector folks are taking up all the footage, for several businesses raising money even for routine operations has become quite difficult. Everything was always contingent on being able to stitch together the right numbers and with suspiscious investors - the numbers are getting more and more difficult to cook up. It is becoming very hard to get the money in time.
I think low value of the dollar actually highlights the problems of selling US debt. Osama's gripes about Saudi investment in US debt could resurface in any country or region that US chooses to sell its debt in - I mean boss this is bad debt - everyone knows it. Even if it doesn't quite get as bad as it has with Saudi Arabia and Pakistan, I imagine that investors in other parts of the world are not going to as enthusiastic about putting money into the US if the return drops in real terms. What is point of getting a $10 return on your $100 dollars if by the time you get it back the price of oil has gone up by $50? - I mean really that is the state of India's own investments in US treasury bonds right now. I don't see this permissive attitude continuing for long. Indian or Chinese investors are unlikely to be as pliable as the Arabs or the Pakistanis.
Right now inside the US no one is seeing the full impact of the high oil price. That should hit in Summer of 2008. The marker for a real impact of this will be first reports of widespread load shedding by the grids.
And yes - I do understand what that means for the India-US nuclear deal - it is tragic really - this had to come to pass - what can be done about it.
Personality politics aside - for them to make money off this deal - they will sell us one reactor at one price and the another at another price and then a third at a third price and so on... in this fashion the economics is just not going to work out.
This deal will have to die - at least right now.
Let them spontaneously come forth with offers to sell downblend from their weapons and then may be we can restart this process on a more stable economic foundation.
In the mean time in India let the DCH can find out what a diesel shortage feels like. If that doesn't teach them - then we might as well write them off for now.
Hi Maverick,
Please remove my previous post as well ... without the Diyar Hadith-ar's post, it is out of place ...
off topic, but I have lately been drawing parallels between Cricket Law and Sharia law ...
when someone gets raped, you know how Sharia approaches it ... in Cricket Law, when a batsman is "raped" by the umpire, the Law punishes the batsman for "showing dissent" ...
american economy is hoping to adopt something similar ... :)
Hi Maverick:
I think the US model does not revolve around actually repaying its debts.
Yes, that I certainly agree with. I don't think the short term problem is unmanageable, though.
From the Arabs (and Singapore!), the US has got over $40 billion in capital since the whole thing went pear-shaped in August last year.
On top of that, the Feds data release for the end of Jan shows that they got almost $55 billion in funds poured in by other Central Banks.
Clearly, Paulsons aggressive panhandling is paying off.
It's clearly not all wine and roses however. Apparently the Chinese are bargaining a lot harder for their help. Businessweek just reported that the China Development Bank was prohibited from putting money into Citigroup for now.
Another point to keep in mind is the Japanese haven't been fully tapped as yet. During the cold war, the US used to bring the Euros heel with the threat of abandonment to the Soviets.
That doesn't work as well anymore, but for the Japanese, their paranoia about the Chinese does give the US huge leverage but at a price. I saw a small item recently about US-japanese discussions on the the Japanese taking a look at the F-22.
This game is a long shot from being over.
profits normalised to oil costs
Good point. Trick is though that normalising growth to energy costs in oil equivalents isn't a static exercise. Technology changes make the base dynamic and difficult to find a normalising factor that everyone will agree with. So comparisons become a matter of statistical opinion rather than hard fact.
Be an interesting exercise though - must try to do it some time.
BTW: One interesting point - commodity prices are rising in most currencies. That means the US and China have successfully exported to their inflation to the globe.
*Everyone* it appears is printing money like mad to at least keep up with the Americans and not allow their currencies to appreciate to fast and damage their own economies. The global price rises/inflation in commodities is the first sign of that I reckon.
What is point of getting a $10 return on your $100 dollars if by the time you get it back the price of oil has gone up by $50?
From my understanding, a lot of folks are going the Chinese route. i.e. They're willing to take the investment loss in return for fixed capital growth.
The Chinese calculation is explicit - we'll lose our US dollar horde in value, but we'll get in return vast highways, factories, manufacturing techs, shiny new cities etc, etc.
The Chinese figure that after the dollar loss they'll still have the dams, power stations, factories, roads etc., so don't give a stuff about the "paper" losses. They're absolutely open about treating that as a cost for their industrial modernisation.
And given what they've managed to do, who's gonna say they're wrong? The results are on their side after all.
I don't see this permissive attitude continuing for long.
No, neither do I. The US is in trouble here no doubt. I'm simply cautious about assuming the depth of the problem. That's not clear at all.
I reckon if it gets worse, we'll see more movement from the Russians, Chinese et al in trying to take advantage of the situation. That they're being very cautious about what they do implies that no one really knows how bad things are; *or*, that things are not as bad as they look.
I think it's the former. Everyones waiting to see just how bad things really are before doing anything. Or maybe it's one of those things where people simply can't believe their eyes - and can't believe that the US could really be that stupid.
If it's a game of bluff on the US' side, which I think it is, they're doing well so far.
I do understand what that means for the India-US nuclear deal - it is tragic really - this had to come to pass - what can be done about it.
Yes it's depressing. The NPA/DCH alliance has killed that it appears.
Funny thing, when the Soviet Union collapsed, folks berated GoI for not trying to get its hands on Soviet tech, for not buying the stuff the Soviets and other former commie countries were throwing away at bargain basement rates.
And when the same thing happened to the US thanks to Iraq, they screamed blue murder to prevent GoI from grabbing whatever they could of US tech with both hands.
Utterly bizarre.
the DCH can find out what a diesel shortage feels like.
Which is the least of it. When inflation in food prices begins to hit the rural areas and start to do things like accentuate the Maoists/Naxalites problem and puts the urban poor put into the streets, it'll be the DCH types who will be the first ones to scream hysterically at GoI.
kg.
Maverick and kg,
boss log, I have a simple query ...
everyone keeps saying that "price of oil is rising" ... is this really true? ... isn't it just a reflection of the fact that the $ is the currency in which oil is priced and the $ is falling ...
so, either "oil is rising" or "$ is falling" ... but not both, right?
is oil actually rising as viewed in Euro terms?
Hi Alok,
It's actually a mixture of both I think.
Yes it's the dollar that's falling. But the oil price increase is larger than the dollars fall. The difference is the *real* increase in the price of oil in dollars.
That (the real increase) isn't much however and varies seasonally. For example, quite mysteriously, during the start of the US winters, all sorts of US refineries seem to regularly go off line for "maintenance".
That spikes the price of gas at the pump.
Oil and commodities in general are rising with other currencies as well, although not as much.
In my view, I reckon if you take out all the seasonal variations, the odd fear factor of war with Iran etc, then the remaining spike in oil/commodity prices are some 85-90% due to currency printing by virtually all governments due to the US' attempts to inflate their way out of trouble.
The last 10%-15% "real" increase in oil is due to supply side problems, i.e. the possibility of peak oil, and in commodities the demand pressure placed by India and China on raw materials.
I don't think the demand pressure is sustainable. At some point enough new factories, mines etc are going to come on line and depress prices.
For oil I don't know. Supply isn't increasing as much. If it is a case of peak oil then prices will eventually reflect that.
But currently, IMO, that's not an issue. The higher prices have resulted in increases in energy liquids production. IMO, the oil price is virtually all due to the dollars fall.
BTW: Keep an eye out for oil price *decreases*. If oil starts to decrease despite the printing of money everywhere, then it indicates that supply has so far exceeded demand that all talk of "peak oil" is rubbish.
That's an interesting possibility of that newer tech in oil extraction may lead to.
kg.
Hi Kg,
I repeatedly told the DCH pied pipers that we should follow the Chinese model w.r.t the deal, but then all this soverignity bullshit was shoved in my face.
Now I am becoming aware that with obvious embarrasment at least some of the members of parliament are privately admitting that this is driven by "political considerations".
Tomorrow I think I will see a few of the more sensible heads come out and say "oops we made a mistake". The saving grace about Indians is that when they make a mistake they admit it. The Americans prefer to insist that they were always right and this puts them into an escalatory bullshiting cycle.
I am hoping that at our end the escalatory bullshit cycle will come to an end as the BJP puts its mass contact program into action and more important economy issues will dominate over this vacuous notion of soverignity being paraded before the media.
Ofcourse at no point of time will this newfound economic realism bring back the opportunity lost in 2007 vis a vis the nuclear deal but at the very least we will be able to put a price on the BJP's next electoral victory.
Honestly I am growing very disappointed by the BJP leadership's lack of holistic politico-economic thinking.
I can say a few more choice words here about the situation but this is an open channel and frankly I am sure my comments will not recieve a favourable audience.
And why just me - no one has the balls to tell the BJP that they are building a palace of wax.
Hi Kg,
With regards the situation in the US.
I don't think we are ever going to get information at the level of depth required to make accurate predictions.
We'd have to literally beat it out of one of the participants and given the number of participants the fragments we could recover in that fashion would take too long to piece together.
The best I feel can be done here is just get a sense of what is happening and the sense is not good.
The US is basically taking out a second/third mortgage after having effectively declared bankruptcy by being unable to prevent the fall of the dollar. This is going to mean very aggressive investors who are likely to push harder for immediate returns. This going to make the US bhoomiputras very antsy especially when lifestyle changes are forced upon them eg. it is no longer about choosing whether to supersize or not - but about accepting that the Big Mac - just became a lot smaller. You will see the infamous scene at the McDonalds in movie "Falling Down" played out in real life.
The super aggressive Chinese model is *the* model everyone will follow - they will demand immediate sales of shit they want from the US. As seen in the case of the India-US nuclear deal, the US national security community does not appear to be prepared to moderate a debate on the impact such sales and the actual transactions will have to be done on the sly feeding all sorts of shady undereconomies.
I think it is worthwhile to develop an index that normalises for the price of energy. I mean a simple way could be to take into account the energy related operating cost of the company and then estimate the actual inflation in those and then the reported profits can be whatever is made minus the inflation in the company's energy related bills. This should tell us atleast if the company is going to pay for itself the next year - *AND* tell the company management if they need to work on ways to increase energy utilisation right away instead of paying themselves that bonus to buy a BMW.
Hi Alok,
I will reply to your post later.
I think Kg has covered the issue well.
Hi Alok,
I think I agree with everything Kg is saying.
I would like to add one detail which I feel is important.
To get explain this detail, I have to wind the clock back - all the way to the second wave of immigrants that came to the US.
The first wave as you know was the so called "Pilgrims" - that came to the US fleeing religious persecution. The second wave were somewhat less religiously persecuted rich folk fleeing from the King's (and other european nobility's) peculiar financial habits.
These folks settled in some of the nicer places cleared by the first wave - places like Boston, Philadelphia or the Piedmont plateau. After these people came here they realised the magnitude of the economic opportunity that had lay at their doorstep. They proceeded to nudge, push and shove the colonies into an economic expansion. In some sense - when we speak of America - we speak of the "America" they have left behind for their descendants.
Their descendants have since managed to infiltrate a vast number of social, political and economic institutions in America and these folk are a little divorced from the "immigrant" grand narrative that the rest of the common folk people that came off a boat adhere to - though I suspect if you ever managed to corner one of these blue blood types - they would swear upon their dead forefathers that they were atleast as "common" as the rest of America. It is an American thing to pretend that one is "mere commoner" while secretly tracing ones' bloodline to the Plantagenets. Just like the most whiskey sodden Pakistani claims to be a pious Muslim sired from the most pure of Arab seeds.
It took the better part of the last three hundred years for the descendants of these second wave people to carry out the infrastructure development and to bind the entire american continent with robust and reliable communication links (roads, rail, air and fibre). Most of the critical economic activity along these high quality communication links is controlled by direct descendants of the second wave. You could say - this is something like what the PLA is doing right now in China - they are using every last ounce of national financial strength to build huge amounts of communication infrastructure - all of which is controlled by relatives of PLA officers. I think you could also compare it to what the Fauji/Bahria/Shaheen Foundations are attempting in Pakistan and "Central Asia" albeit on a smaller scale - the true roots of the American-Pakistani love affair.
Keeping these American links in good operating condition - i.e. servicable to the point where access to internal resource generation is not frustrated requires a certain amount of fuel. Typically, due to the sizes involved, the American links require larger amounts of fuel than their Indian or European counterparts.
Companies that purchase the fuel needed to keep these communication links open - all exploit economies of scale and certain set of financial insturment to ensure the lowest possible price of their fuel.
The price increase has been at its lowest. Whatever the "spike at the pump" may be - it all averages out by the time something like American Airlines has to place a bid for its annual fuel contract. By and large this core economy is well insulated from fluctuations.
To some degree this real price inflation has been offset by printing dollars or effectively selling the gold in "fort knox" or other things squirreled away underground. The problem is that creating innovative financial instruments in this manner - relies on the negative economic fluctuations in the general economy remaining largely decoupled from the core.
However in the US, this is where the problems are appearing. The large amount "parasitic" (unrelated to the core) usage of communication links is rising rapidly in the age of consumerism. This is slowly coupling the economics of the core to all manner of less predictable or desirable fluctuations in the general economy.
Additionally, the printing dollars idea has been extended to cover all manner of public debts. So what used to be a careful bailout measure for a select few is now the financial "opiate of the masses".
This is where it is getting really hairy and that is why in my opinion one cannot make too firm a statement about things in the US. It is obvious to anyone who can see the core economy is widely coupled to the general economy where a culture of inefficiency rules the day. Additionally, it is also clear to most people that the traditional inheritance models followed in the core economy are not producing leaders who are up to the challenge. Pretty faces are brought forth to appease public sentiments but by consequence the hard task of ruling is left to novices.
Things are indeed worrisome.
Hi Maverick,
Interesting take on energy links to the good old boys ... those sipping cognac and won't touch whiskey or rye ...
I am still trying to put my head around this paper economy problem ... uncle prints money which is mere paper ... dragon is gholding on to T-bills which are mere paper ...
so ultimately, it has nothing to do with paper and/or debt but all other forms of currency like power projection ...
in that sense, energy security is as powerful a weapon as an arsenal of megaton nukes ...
btw, I am winning big time in this sub-prime meltdown ... I decided long time ago that the Banker Dude really had no pwer over me ... he only had a Nuke Deterrent with its own *assumed* MAD philosophy which said that "if you run away without paying me money, I will ruin your credit rating" ...
well, yours truly decided that "credit rating" is even less useful than the paper money that the Banker Dude had happily given me ...
so, I am laughing all the way *away* from the bank ...
Banker Dude is whining to Uncle ... :)
Hi Alok,
I think bankruptcy is perhaps easiest to declare in the US and typically the richer you are - the easier it is to do this.
The price paid at an individual level is very small - you have to pay a higher interest rate on next loans - higher than what you would pay if you didn't declare bankruptcy - but not very different from what your would pay if you were in Asia.
Your poorly performing loan is then "repacked" and "collaterized" and a few dozen tons of other gibberish is packed on to it before it is resold to an unsuspecting buyer.
This is the poison that has finally hit home in the US credit sector. Everyone does it, so everyone is wary of being had by the others. Everyone knows that this can be done again and again - and so despite all the capital that you can print or shake out of the Chinese/Arabs/Pakistanis - there is very little that is trickling down into the hands of Americans.
The extent to which the population relies on electronic transactions and credit instruments is stunningly large and with a credit crunch elsewhere the reliance on the credit cards is bound to rise.
Recession ... no .. I would use the word "contraction" to describe what will happen if this keeps up.
I am afraid they have to curtail expenditure. Honestly speaking - the whatever the reason they went into Iraq - "WMD" or "Cheney wanted the oil" or "Saddam tried to kill Dad", or "We could not let him keep the UFO that crashed there", or "the Reptilians made us do it" etc...
There is no reason why they have to linger there when it costs so much money. Money that could be profitably spent elsewhere domestically - like subsidizing energy costs for homes and businesses or to provide financial relief to homeowners.
So far key American economists has said the falling value of the dollar in international markets is not a problem. And it sounds about right because economists tend to speak in terms of averages.
On the average the falling value of the dollar does not matter.
On the average the falling dollar will make US industry more competitive.
On the average the falling dollar will allow the US to hold Chinese, European and Arab financial institutions hostage and on the average they will be able to force an investment out of these guys into the US economy.
The place where it falls apart - is the microscopic picture of the economy. If things don't go well for you - loyalists in the hedonomics industry will do their level best to shove you into the wings of the gaussians generated by their economic simulation codes. To them it does not matter if the width of the gaussian becomes wider - so long as they can claim that the center has not moved.
Unfortunately for economists of this sort, everything is coarse grained to the point where it maps on to an ideal gas - and frankly their predictive models do not capture the richness of economic reality.
The end result of such labours is a model that is either just plain fake - eg. all the crap that all the banks were doing until recently or... hopelessly sensitive to the fudge factors used in the number generators... eg. well.. why name names.
The biggest conceptual flaw in the model of money printing is that the US is sooooooo large that the world as a whole will have no choice but to simply accept losses.
This is total crap - the world is not going to put up with a US which routinely expects it to suck up bad loans.
The people who subscribe to this flaw are not going suddenly get up and admit they were wrong. They are going to go around blaming the world for being "way too real".
Its nice to be among old friends!
There is no motivation for uncle Sam to rescue dollar. Why should he care when he can print them and the Chinese, Russians, Europeans etc are ready to collect them!
Its the collectors problem not the suppliers problem!
Besides like home owner who has 80% equity in the home would think twice to drive a nail in the dry wall or park his rusting car in the drive way. Because it reduces his property value, he has a vested interest in keeping its value equal or more than the equity he has.
Hence the dollar accumaltors have an intresic interest to rescue the dollar with all their might, lest their exports are going to be costly (except when the exporting country is selling commodity that is abundant only with them, even then there will be break even point, beyond which the returns are marginal).
So uncle will smoke a cuban cigar and watch the whole world scramble to rescue the dollar or pump them (dollar) back into US as the US will not default and continue to print and consume wealth.
After all US economy is driven by consumption, and not by savings...
In nut shell just like Pakistan, Afghanistan, Iraq and Iran are a problem for uncle but not the world, The falling dollar is problem for the world but not to uncle.
Bring em on says uncle...
Hi Anonymous,
Welcome aboard.
I think you are voicing the current wisdom popular in the US about the dollar.
It is the same thing that kg heard over in that bar in Tokyo - the notions that somehow Asia is going to pick up the bill after the US is done eating.
The flaw here is that the US is going to have to ask Asia to pick up the bill - Asia won't automatically do it. By requestin the Asians to invest their dollars in the US economy - the US going to be at the mercy of the investors. The investors are going to want to invest on their own terms - not on terms that the USG wants them to.
This is where the troubles begin imo.. if the US bhoomiputras are not comfortable with being told how to spend the money - then... that is not going to be good domestically.
Sure Iran, Pakistan, etc... are all problems for American investors, but surely the Americans do not want the rest of the world to think of them with the same disdain that the Americans think of Iran and Pakistan.
If the world thinks of America in the same way the Americans think of Iran - i.e. a place to bomb to bits - well that is a very big shift from the American narrative of being the land of freedom and opportunity.
Perhaps Americans do not understand that in most parts of the world - a debt is not simply a piece of paper - it is a piece of your soul.
Post a Comment
<< Home