The Bonddad Blog: A Must Read

Thursday, February 22, 2007

A Must Read

Go read Fed's Yellen on Housing at Calculated Risk. It's at the top of the page. CR has done a great job with the housing market -- and this article will only solidify his reputation in that regard.

3 comments:

Theholyfatman said...: Question for you: I was discussing the current state of the Economy with an employee of the US Treasury. he said that the Sec of The Treasury had given a big talk to all employees and the biggest concern was the ongoing discussions with China RE: devaluing their currency. The Teasury Sec doesn't see that happening within the next three years. However, China does understand that their economy is dependant on our consumerism and won't try to upset that delicate balance. I agree--somewhat But I'm not 100% confident that China won't move to blow our economy to hell and back.
Your thoughts?; February 22, 2007 at 10:01 AM
bonddad said...: No US consumer -- no China exports. It's that simple.; February 22, 2007 at 10:18 AM
bonddad said...: Here's the non-smart ass answer.

All of the parties are aware that a massive run on the dollar would destroy $1 trillion in dollars the Chinese hold at their central bank. That would cripple two countries.

Right now there is a currency game of chicken and Mutual assured destruction going on. Central banks around the globe want to diversify. But if they do it too quickly, they will hurt their own reserves. At the same time, our trading partners know that both sides of the international trade game can royally screw the other. The US can erect massive trade barriers while the Chinese can dump dollars. Because both of these moves would destroy both parties, neither will do it.; February 22, 2007 at 11:18 AM