House of Paine

heres a guy worth his ration of salt pork

he fires back at the pink

apropos a  brewing
            dollar crisis :


"give me the case against
 a perfect storm"


and then we're off to the races....


====================================


"I  do think 
the risks today
 are quite large
 so am not gonna stop 
   writing 
about this"

" 7% current account deficits
 are not generally a sign of health"

"but there is a real risk
    i am getting stale"



"  i have tried 
to stick to topics 
i know something about 
which means 
a certain element
 of repetition"

"    but i 
may be running out
 of fresh insight,
 as you note ..."

what a fuckin guy !!!!!!!!


============================

later after i'd chucked 
a few imperial spears his way 
(see note below)

this came :

"i certainly agree 
that valid comparisons 
to the dollar
  are close to zero.....

i don't think i have ignored 
the $ unique position 
as a reserve currency"

-------- nb:
  he writes "a" reserve curency 
UNIQUENESS DENIED ---------------------- 
 
" i certainly have argued 
that deficits of the current size 
are pushing 
the limits even for a reserve currency"

---------- which brings up the real question

how big a yankee deficit is too big ??

 one that causes an unexceptible run up
             in the global  inflationrate ------------

-------------- he then list any reserve currencies 
advantages ------------------------------

the advantages:

" a favorable currency structure
 of the us external debt 
(in $) "

 -------------- ie unlike other outfits
 with foreign debt in foreign currency
us debt is in dollars

something the fed can produce 
         in any amount on demand ---------------


 "  also since
          us 
assets/ liabilities position,are all in dollars 


  $ depreciation = no increase in us  debt 
cause its in $'s
 and as a bonus 
 big increase in us external assets"

----- the unique yankee  
            niip and fuck ---------

" no income payments (net)
 despite a net negative (22% at end of 04, likely 
to be30% of gdp at end of 05) international investment position"

----------- this because yanks get a higher return on foreign holdings
then foreigners get on hold yank $ assets -----------------


  
" the ability to fund 
a $800b/ 6.5-7%of gdp current account deficit
 by 
selling debt that pays 4-5% nominal
 and has a decent term structure "

------------ see above point --------------------


" typically
 a reserve currency earns 
its position with solid financial 
management"

---------------- yes sir but not "the "imperial dollar 
the none such currency of ..."the" hyper power ---------------
  
"the question is
 when the size of the deficits 
and cumulative increase in the 
debt 
 starts to overwhelm the undoubted advantages
 of supplying the world's 
reserve currency"

--------as posed
   an utterly meaningless notion
         on the supply side
   our dollar credit is infinite 

so whats to be overwhelmed ?

the willingness to absorb new  dollars
by our ... foreign partners


the deficit max  
            is 
 the surplus accumulations
 of the rest of the world 

  the end zone???

when the globe hits the end 
of its  out put gap 

   india china ....

 maybe
        a billion jobs of slack.....


  god knows what the  real overwhelm  number looks like ------------


"i suspect that point may arrive 
in the next year or two "

----------- whats he thinking

the world's other CBs
will say

thats it we're pullin back the yankee doodle credit line ...

and what????

turkey rope the global system ??

why ???

only question

could a privateer spec stampede
cause em to lose their collective nerve ----------------



 
--------------------------------------------

note:

here

(in part)

is  my prior E
               to himself

>let me  point out 
what i see too little talk  of:

>
> the dollar
> as "the " hyperpower
                 currency


> and 

>the  
>"unique" dynamics
     this implies 


-------------------------------------

>if indeed uncle dollar
>  ain't like the other kidz
>
>if he's  uniqiue


>then valid 
>"comparable observations"
>are ....zero


>and
>thus
>    each stage perhaps
>  becomes unique as well



> we are in uncharted waters 

>and have been since ...
>
>well
>
>   " gold save the queen "
>
>  since

>we all
>went off keynes-white
>back in 71

-----------------------------------------