QuoteOriginally posted by: BullBearQuoteOriginally posted by: MartinghoulQuoteOriginally posted by: BullBearQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: BullBearPeople are also happy to buy US debt... They even paid a negative yield on a T-Bill on March... Remember?Yes, and many people eagerly accepted low yields on ARS and look what that got them. There was a massive flight-to-quality in early 2009 and T-bills seemed like the safest and most liquid instrument in the world. In essence, T-bills were the cream of the crap at that time. Whether US debt will retain it's favored spot in the pantheon of instruments remains to be seen.I'm not saying to buy T-bills only. No asset is risk-free!!! There's no such thing as a risk-free asset.I like the CNBC measure a lot!1. They are reporting external debt. External debt is external debt.2. All external debt - public and private - matters.External debt must be a measure of how much debt a country (public and private sector) owes to foreigners.1. Yes, so what? Debt is debt, whether external or internal.2. Huh? I hope you mean to say 'all debt matters'. Otherwise, are you suggesting that the debt held by the country's own citizenry/corporations doesn't matter or matters less than that owed to foreigners?The table is about external debt! External debt is how much a country owes to foreigners.Domestic debt? Dunno the figures. But it's their money. As long as there's no hyper-inflation or deflation that's fine. What are the figures on other countries? And don't forget how high is the US GDP relative to other countries...But that's EXACTLY my point... The table about 'external debt' tells only one side of the story and is misleading. Why do you insist on looking only at the debt that's owed to foreigners? What's so special about it? It's similar to looking at the short side of a futures mkt and saying that there's a large aggregate short position out there. As to the GDP, its size doesn't matter precisely because you're looking at the ratio of debt to GDP.Suppose I give you two hypothetical countries, A and B. Entities (both public and private) in country A owe a total of $10, of which 50% is held by foreigners. On the other hand, entities in country B owe $100, of which only 1% is held by foreigners. Let's say, for simplicity, that their nominal GDP is the same.Does it make you happy that country B is gonna appear lower on the CNBC 'external debt' list than country A? Which country, in your view, is more 'leveraged'? BTW, in response to your original post, EUR is indeed a laggard in the devaluation race to the bottom, simply because it's a lot harder to devalue the EUR.
Last edited by Martinghoul
on November 3rd, 2009, 11:00 pm, edited 1 time in total.