Dear Angry Lefties: Your Imported Pitchforks are Foreign Financed
Credit: Reputation for
solvency and integrity entitling a person to be trusted in buying or
borrowing: You should have no trouble getting the loan if your credit
is good
We digested the American pie over three decades ago, and we now owe even the Indonesian soles of our shoes to foreigners. Our trade deficit based service economy has for the past three decades been one of increasingly borrowing from abroad to purchase from abroad, and Americans have survived by suckling from the global financial teat, and the world was all dandy with this because of our unique credit. The fact is that credit has been for a long time the US's one true asset, and with a global financial crisis and our nation collapsing into a depression, the consensus is that investment is our least painful way ahead, but in order to invest we must more than ever resort to our credit.
However, in many circles there are cries that we should stiff the sovereign bondholders who invested in major private bond markets in institutions such as Citi. Puzzlingly it should be Treasury that steps in to effectuate the stiffing, the very same Treasury which must maintain credit to finance our recovery. After stiffing these creditors, we then simply expect them to return business as usual and buy our Treasury Bonds so we can finance our much coveted healthcare reform and other liberal dreams.
Sovereign funds from abroad are already growing impatient, and although they too are inextricably intertwined with us in our financial bacchanal, they do not necessarily have to continue in this path. We are in a position to call China's bluff, since everyone knows that the value of the US bonds they hold will only diminish as they let go of them. However, to what extent must any longterm lenders continue to give us fresh credit for our dream supertrains and investments in new energy if we make the decision to stiff them through the private institutional bondmarket, all in the name of politics and pitchforkers threatening with imported pitchforks purchased at Walmart. Of course, many will disingenuously attempt to blurr the difference between stiffed Citi bonds and Treasury bonds, but from the eyes of a world of sovereign lenders, the difference will at best be fuzzy, but their lost wealth will be as real as their diminished capacity to lend to us and also as real as our evaporated credit.
How ironic it is that the cry for Treasury to step in and stiff international bondholders at Citi and other institutions is advanced by precisely those who most wish that Treasury issue debt to finance their dream healthcare reform. There is a typically American hubris-filled notion that we can stiff our foreign creditors on one end and expect them to continue offering us trillions on the other, via Treasury bonds, to finance our safety net and our pet projects. I, for one, know that my credit is based on my payment history to all of my debtors, and the world will judge the US likewise.
Perhaps some of us need to pause and reconsider, put down our Chinese manufactured pitchforks, and place practicality before moral indignation, and most of all admit to ourselves that we all partook in the loot.
We digested the American pie over three decades ago, and we now owe even the Indonesian soles of our shoes to foreigners. Our trade deficit based service economy has for the past three decades been one of increasingly borrowing from abroad to purchase from abroad, and Americans have survived by suckling from the global financial teat, and the world was all dandy with this because of our unique credit. The fact is that credit has been for a long time the US's one true asset, and with a global financial crisis and our nation collapsing into a depression, the consensus is that investment is our least painful way ahead, but in order to invest we must more than ever resort to our credit.
However, in many circles there are cries that we should stiff the sovereign bondholders who invested in major private bond markets in institutions such as Citi. Puzzlingly it should be Treasury that steps in to effectuate the stiffing, the very same Treasury which must maintain credit to finance our recovery. After stiffing these creditors, we then simply expect them to return business as usual and buy our Treasury Bonds so we can finance our much coveted healthcare reform and other liberal dreams.
Sovereign funds from abroad are already growing impatient, and although they too are inextricably intertwined with us in our financial bacchanal, they do not necessarily have to continue in this path. We are in a position to call China's bluff, since everyone knows that the value of the US bonds they hold will only diminish as they let go of them. However, to what extent must any longterm lenders continue to give us fresh credit for our dream supertrains and investments in new energy if we make the decision to stiff them through the private institutional bondmarket, all in the name of politics and pitchforkers threatening with imported pitchforks purchased at Walmart. Of course, many will disingenuously attempt to blurr the difference between stiffed Citi bonds and Treasury bonds, but from the eyes of a world of sovereign lenders, the difference will at best be fuzzy, but their lost wealth will be as real as their diminished capacity to lend to us and also as real as our evaporated credit.
How ironic it is that the cry for Treasury to step in and stiff international bondholders at Citi and other institutions is advanced by precisely those who most wish that Treasury issue debt to finance their dream healthcare reform. There is a typically American hubris-filled notion that we can stiff our foreign creditors on one end and expect them to continue offering us trillions on the other, via Treasury bonds, to finance our safety net and our pet projects. I, for one, know that my credit is based on my payment history to all of my debtors, and the world will judge the US likewise.
Perhaps some of us need to pause and reconsider, put down our Chinese manufactured pitchforks, and place practicality before moral indignation, and most of all admit to ourselves that we all partook in the loot.
