tag:blogger.com,1999:blog-30643134.post3125379967896593154..comments2023-12-26T01:10:26.319-05:00Comments on Accrued Interest: The Phantom Menace (update)Accrued Interesthttp://www.blogger.com/profile/05096191765979971184noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-30643134.post-66046336647543957942007-10-04T14:56:00.000-05:002007-10-04T14:56:00.000-05:00IMO, the reason why foreign govts throw cash at us...IMO, the reason why foreign govts throw cash at us is because we are the Fort Knox of the world. We have the military might to protect their money. Swiss banks arn't big enough to handle all that money and those Swiss don't have any shock-and-awe firepower.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-49659828068659613162007-10-03T11:32:00.000-05:002007-10-03T11:32:00.000-05:00Another very interesting paper is "The Unsustainab...Another very interesting paper is "The Unsustainable US Current Account Position<BR/>Revisited" by Kenneth Rogoff and Maurice Obstfeld, where they account explicitly for the large relative size of the USA economy.lvhttps://www.blogger.com/profile/10344307442259439042noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-79705993934791146712007-10-03T11:05:00.000-05:002007-10-03T11:05:00.000-05:00I should add: 10% with no risk. Because they were...I should add: 10% with no risk. Because they were European government bonds.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-41319382070019731982007-10-03T11:04:00.000-05:002007-10-03T11:04:00.000-05:00What is certainly, certainly true is that the doll...What is certainly, certainly true is that the dollar has been having an awful time against the euro.<BR/><BR/>Consider this: you bought 5% yielding bonds 10 years ago denominated in euros.<BR/><BR/>Today, in dollar terms, those bonds are yielding 10%. That's a nice investment.<BR/><BR/>Is that wrong?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-3577345293765631782007-10-03T07:34:00.000-05:002007-10-03T07:34:00.000-05:00Wille and Bureaucrat: Both of you are saying what ...Wille and Bureaucrat: Both of you are saying what I've always thought, and so far no one has pushed me off my original premise. It wouldn't seem that any CB would diversify fast enough to cause a dollar collapse. Impossible? No, because its a market and markets are subject to panics, but I don't think betting on such a thing is very prudent here.Accrued Interesthttps://www.blogger.com/profile/05096191765979971184noreply@blogger.comtag:blogger.com,1999:blog-30643134.post-58351736203401291332007-10-03T03:53:00.000-05:002007-10-03T03:53:00.000-05:00Whether markets are myopic is not really the point...Whether markets are myopic is not really the point - or at least not any longer. Over the last two quarters NET inflows into the US have come almost exclusively from official sources. Brad Setser - probably the expert on the issue - has been arguing this point for a while at his blog, and my own analysis confirms that he is spot on. So the real question is why (mainly) central banks are willing to pour hundreds of billions into dollar assets, and the answer is that they are doing if for - what their countries consider - a higher good, as preventing nominal exchange rate appreciation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-36272534343357155882007-10-02T21:29:00.000-05:002007-10-02T21:29:00.000-05:00In the land of blind men, the one eyed man is king...In the land of blind men, the one eyed man is king...<BR/><BR/>People keep buying USD because there isn't really a viable option. <BR/><BR/>EUR is even more flawed (loads of debt, loads of off balance sheet entitlements, and mature economies -- plus too many cooks in the kitchen). CAD and Kiwi are nice, but way too small (and CAD is too dependent on the US). CHF is part of Europe no matter how much they fight it.<BR/><BR/>JPY is a mature economy with 150% debt to GDP and a bunch of geezers at the helm.<BR/><BR/>All the other markets in Asia are shallow, undeveloped and lack transparancy.<BR/><BR/>BRL might be a maybe, except for that pesky banana republic history. Plus the economy is too small to absorb much capital.<BR/><BR/>Russia may or may not be a kleptocracy depending on which day you look.<BR/><BR/>Most of the middle east is one bomb blast or one lucky shot away from overthrow.<BR/><BR/><BR/>Against all that, the US is still relatively transparent. It has deep, liquid markets. The economy is still the biggest single economy in the world. And everytime someone has written us off in the past, we did something bizare to get ourselves out of it.<BR/><BR/>No guarantees we can wriggle our way out of this -- but if you must place a bet, the US looks the least badAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30643134.post-73100347224296527012007-10-02T16:35:00.000-05:002007-10-02T16:35:00.000-05:00Well, I think people behave far more based on what...Well, I think people behave far more based on what they know to be true in their past without looking too far beyond it and the types of economic conditions that now exist have been forgotten in the collective memory. <BR/><BR/>I would think that people who have lived though currency declines in their native countries and appreciate it was related to debt are concerned about investing in American assets.Deborahhttps://www.blogger.com/profile/05180123507766228764noreply@blogger.com