Bushonomics

BenReilly · Nov 14, 2004

During a routine sale of U.S. Treasury bonds in early September, one of the essential pillars holding up the economy suddenly disappeared.

Foreigners have been regularly buying nearly half of all debt issued by the U.S. government. On Sept. 9, for the first time that anyone could remember, they stayed home.

"Thoughts of panic flickered out there," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer. The foreigners returned in force at the next Treasury auction, and Sept. 9 was quickly dismissed as an aberration.

But the episode demonstrated how much the U.S. economy is dependent on other countries to bankroll its free-spending ways. That fragility is becoming even more precarious because of recent declines in the U.S. dollar to multiyear lows, some economists say.

Amid worries about bulging U.S. budget and trade deficits, the greenback dropped last week to a record low against the 5-year-old euro, a 12-year low against the Canadian dollar and a nine-year low against an index of major currencies. Many analysts don't see anything that will stop the decline.

(...)

Ultimately, these economists say, the solution is for the U.S. government to reduce its massive budget deficit. That would curb the need for Uncle Sam to issue so many Treasury notes. And the dollar would rise on its own, because the deficit is the main reason it continues to fall.
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http://story.news.yahoo.com/news?tm...1114/ts_latimes/dollarsdeclineisreverberating

Chicago1871 · Nov 14, 2004

US foreign "policy" and economics are my two biggest complaints against Bush.

ratdog · Nov 14, 2004

Bush's economic policy summed up in two phrases:

1) borrow and spend

2) soak the middle class

DoctorJones24 · Nov 14, 2004

ratdog said:

Bush's economic policy summed up in two phrases:

1) borrow and spend

2) soak the middle class
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How else are you supposed to induce the type of national economic crisis that will necessitate abolishing Social Security, welfare, medicare, and public education?

chad · Nov 14, 2004

Well, at least drinking to soothe the pain will kill me off before I'd have had to worry about social security and medicare benefits anyway.