Great point! It will also be interesting to see what the Chinese, Japanese and European investors do now that they know we sold them worthless mortgage backed securities? The Dollar in in Peril!
This isn't the first time foreign investors in
speculative crap in the USA have gotten burnt. Our
railroads were built in the 1800s by fly-by-night
organizations, sort of 19th century dot coms, who
mostly went bankrupt, leaving the British empire and
French Republic on the hook for billions in modern
currency.
I don't have a lot of sympathy for the British,
French, Germans, Japanese or Chinese. They all
contributed "excess liquidity" to our economy, causing
it to overheat and causing life for the average
citizen of the US or EU to have living costs soar as
speculation, coupled with the tripling of the money
supply, shot affordability out the window.
In most major metro areas in the USA, UK, Germany, and
Japan, houses are unaffordable dreams for all but the
extremely wealthy. Heck, here in the Bay Area,
ravaged by the ongoing tech recession, a teeny condo
in a dodgy area of town starts at 300,000 -- by
traditional measures of 3x earnings, one would have to
earn $100K annually to "afford" the mortgage.
The Central Bank of China will lose its shirt (and
with it, its ability to modernize its military forces
and menace its neighbors). The EU Central Bank (and
to a lesser extent, the Bank of England) will both
take huge baths -- and their efforts to prop up the US
market to create a continued place for their countries
goods to sell (they're certainly not selling in the
moribund home market) will result in the undoing of a
great deal of the European socialist "project."
Without a flood of overvalued dollars popping off the
printing press flowing into Europe as "AAA rated
CDOs," there's going to be a huge correction there.
Add in the fact that European goods and services are
now hopelessly expensive in dollars, and it's good
news for US and Canadian manufacturing.
At worst, we're going to have a wave of overleveraged
yuppies losing the overpriced home and the
overleveraged BMW, and moving into a 1 BR apartment
and driving around in a Hyundai. We'll also get a
boost for domestic manufacturing (and those who saved
money will be able to pick up houses and other assets
on the cheap as the overleveraged yuppies sell their
toys and assets at fire-sale prices to get cash to buy
Kraft Macaroni and Cheese).
It's something that's desperately needed -- eventually
the free market will return our economy to one that is
based around doing productive things, rather than one
that's majority-dependent on government employment
(and that had a large section of its private sector
doing work with no real value, such as repackaging
toxic loans into CDOs).
Cheers,
Brian
--- bruce powell <brucemajorsdcre@...> wrote: