On Thu, 19 Mar 2020 12:08:33 -0400, "Mr. Luddite"
wrote:

I am not sure the government can print enough money to fix this
without crashing the dollar. I doubt anyone wants zero percent bonds.
You might as well hold the cash and hope it is still good for more
than toilet paper.



Greg, with all due respect (and I *do* respect your thoughts and
opinions) I've been hearing about the "debt bomb" and that the
economic sky is falling for as long back as I can remember as an
adult.

As long as there is economic growth (over the long term) be it
a business or a government, the debt, although important to
watch and monitor, isn't a death sentence.

Debt only matters at the end of keeping score. But, at the end, debt
doesn't matter.

===

That has always been true, in our lifetime, and in this country.
However history abounds with examples of countries who got into severe
trouble by printing money to excess. Italy, Greece, Argentina and
Brazil are prime contemporary examples. All of them have been subject
to severe austerity measures, foreign financial involvement, and
considerable political unrest.

We're not quite as vulnerable now that we've achieved energy
independance, but we do import enormous amounts of manufactured goods
from China. Imagine a scenario where China would no longer accept
dollars in payment, or where China would no longer buy our Treasury
bonds. What sort of concessions might they demand as a result?

Far fetched? Maybe, but it has happened to other countries at other
times.

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On Thu, 19 Mar 2020 12:08:33 -0400, "Mr. Luddite"
wrote:

On 3/19/2020 11:58 AM, wrote:
On Thu, 19 Mar 2020 11:01:55 -0400, "Mr. Luddite"
wrote:

On 3/19/2020 10:39 AM, wrote:
On 19 Mar 2020 12:20:15 GMT, Keyser Soze wrote:


US stock futures
U.S. equity markets pared losses at the end of trading Wednesday. Activity
in the overnight futures market suggests further volatility is in play.
Dow futures tumbled more than 700 points Wednesday night, pointing to
another volatile start to trading in New York.
The U.S. dollar index broke 100.00 for the first time in almost three
years. The fastest bear market in history shows no signs of abating anytime
soon. In the near term, this means an even stronger dollar.
The strength of the greenback proves once again that cash is king in times
of crisis. Unfortunately, this could stoke another liquidity crisis – in
foreign exchange markets, no less.



The dollar is only as strong as the faith in the fed and when they are
printing money out of thin air to sell bonds nobody will buy at zero
percent interest people could lose faith in the fed and the dollar.

We better rethink this "close everything" mentality while there is
still a country to save. The market is dropping $500-1000 a day, real
unemployment is around 30%, maybe higher right now in construction and
the service sector. When are we going to figure out the financial
danger is higher than the virus danger?

I am actually encouraged when I hear medical professionals are
catching this virus. Maybe they will be over it by the time they
really start getting slammed. You really don't want them sick when the
hospitals are at 120% capacity. I am also not that concerned that the
kids are out there catching this stuff ... for the same reason.
Somebody needs to be healthy to run the world in a month or so when
this has swept the country and everyone else is sick.



Interesting (I guess) but too strange and fatalistic for me.

If people *do* as they are being asked, we will eventually get this
behind us. With corvid-19 behind us we can start working on repairing
the economy and unemployment. We have to keep in mind that the *only*
reason people are losing jobs is because of corvid-19 and the spread
risk. Once gone the economic recovery will begin as it has already
begun in China.

The problem is the debt bomb. In 2 months there might not be an
economy to rebuild.
Just one simple example. They shut down a big building project here.
100 guys lost their job immediately. This will then ripple through all
of the suppliers and the local businesses that were supporting those
100 guys. The contractor has materials sitting on the job and in the
pipeline that are bought on credit. That bill will come due with no
revenue coming in. His completion draw will be late.
Of course the 100 laid off guys have bills due too.
That is just one project. They are shutting down jobs all over town.
They also shut down the beaches and all of those people are out of
work. Loans the business owners planned on paying with the profits
from the spring activities are not going to be paid off.
If mortgages are not being paid, the banks will be stressed and since
these mortgages are collateralized, this can ripple through the whole
financial community. There are still plenty of derivatives out there
leveraging those collateralized loans it makes this a 2008 situation
if it goes on too long.
Corporate debt is at an all time high and that debt needs to be
serviced too, with decreasing revenues.
At a certain point, with tax revenues cut down, government services
will have to be cut. They have debt they need to service too.
At a certain point this virus starts looking pretty insignificant.
Nobody is saying it yet but you will start hearing this soon.
I hope by the time they acknowledge it, we still have time to do
something.
I am not sure the government can print enough money to fix this
without crashing the dollar. I doubt anyone wants zero percent bonds.
You might as well hold the cash and hope it is still good for more
than toilet paper.



Greg, with all due respect (and I *do* respect your thoughts and
opinions) I've been hearing about the "debt bomb" and that the
economic sky is falling for as long back as I can remember as an
adult.

As long as there is economic growth (over the long term) be it
a business or a government, the debt, although important to
watch and monitor, isn't a death sentence.

Debt only matters at the end of keeping score. But, at the end, debt
doesn't matter.

Debt as a percentage of GDP does and that keeps getting worse. We have
also never been in a position of this much debt with a decreasing
market share in the world. The other example is the end of WWII when
we were the only intact manufacturing country in the world. If you
wanted something, we made it. The alarming thing for me is how much of
the gross revenue of the US goes to servicing the debt and at a very
low interest rate., What happens if that interest rate climbs to
Carter era numbers? We could end up in a position where revenue won't
even cover interest and entitlements. We are close to that now. This
year could actually push us over that cliff if we don't get business
started again, people back to work and get our tax revenue up close to
the projected levels. It will certainly fall short at this rate.