Sharing dong infonya apa yg terjadi pd ekonomi dunian taon 1968-1973, blon lahir neh taon segitu seh. thx
Is foreign debt a wolf at the door?
Monday November 1, 11:18 pm ET
By Peter Brimelow
NEW YORK (CBS.MW) – Remember the boy who cried wolf – and one day the wolf ate him? How about crying “foreign debt”?
Borrowing from abroad was a hot issue in the early 1980s.
The Reagan Administration''s many critics said foreigners had financed the boom.
But it sure didn''t look that way on a chart. (This was when I got really interested in charts). Foreign holdings of federal debt had fluctuated in the past – and in the early 1980s were still relatively low, and falling.
That was then. This is now.
After meandering upward in the late 1980s and early 1990s, the fraction of outstanding Treasury debt owned by foreigners exploded during the boom years. See chart below.
At the end of 2003, 37.3 percent of Federal debt was in foreign hands – more than double the 18.2 percent share of 10 years earlier.
There is no sign of a let up. In 2003 the Treasury sold $373 billion of bonds to the public. Foreigners bought $259 billion, or nearly 70 percent.
We don''t see any precedent in the historical data for this situation.
But, curiously, we don''t hear all that much outcry about it.
What does this foreign financial inflow mean?
Literally what it means is that foreigners are financing the U.S. budget deficit and, in the process, our chronic trade deficit.
Very nice of them.
Arguably, this situation could go on for a long time. In fact, it already has.
Most of the foreign-held debt is held by Central Banks of countries that depend on U.S. trade. Some observers assume that neither China nor Japan would sell their holdings of U.S. Treasurys, because of the negative consequences of such a move on their own economies. For one thing, weakening the dollar would make their exports to the U.S. more expensive here.
But it''s hard to look at the extraordinary upsurge on our chart without wondering: what happens if the foreigners stop buying?
It won''t be the end of the world – markets equilibrate in response to shock – but it could presumably mean sharply higher interest rates and a weaker dollar.
Shockwaves could extend beyond the U.S.
The world monetary system is based on the dollar. Dollar-denominated bonds are issued throughout the world. Their value would be jeopardized.
One investment service that is looking at foreign debt is Bridgewater Associates.
This week, it observed that the current situation is eerily like 1968-1973, with China playing the role of Japan and Germany and buying U.S. Treasurys to prop the dollar up.
It was unsustainable and, argues Bridgewater, still is. The service says:
“Right now, China''s ownership of U.S. paper is nearly a third of the Chinese economy, up from about 15% two years ago. If the existing system continues, we estimate…that the total value of Chinese holdings of U.S. dollars will exceed the total value of China''s GDP in five years.”
Bridgewater seems to expect it to end, as in the 1970s, with dollar devaluation, commodity price increases and some wrenching structural change.
The wolf may not be here. But it''s coming.
Popularity cycle: Enthusiasm for market timing proves cyclical
Performance chart: Timing-only scoreboard for stock market timers
Profiles: Corcoran''s Chronicle, The Dines Letter, Professional Timing Service, Systems and Forecasts
urun pendapat neh. IMHO ga ada satu sektor pun di sektor riil skrg yg lagi rame ie retail, makanan, tekstil, komputer, property, dll…kalo ada jg biasanya yg bisnis haram neh.hehehe ato ada yg bisa kasi info bisnis apa yg lagi rame, soalnya lagi mikir2 cari bisnis laen =)
so kalo liat gini apa mungkin LK 2005 bisa lebih bagus dari LK 2004 yg super ijo ? kecuali kurs usd/idr jadi 8500 lagi. medium term gw pikir ihsg bearish kali ya. tapi satu lg yg bikin bingung, koq indent kijang inova masih hrs nunggu sampe akhir taon br dpt barang neh.