tag:blogger.com,1999:blog-1331441403058020963.post5654327707767920448..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: The World in DecessionThomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1331441403058020963.post-49382484009047412902010-05-29T05:31:44.932-04:002010-05-29T05:31:44.932-04:00Admittedly I sound like I'm cheerleading here,...Admittedly I sound like I'm cheerleading here, but that wasn't my intention. I'm really trying to come to grips with why Treasuries haven't yet spiked, and DeLong's post made some sense: SWFs and institutional investors need large quantities of safe, liquid assets. ABS used to fulfill that role, but no longer. And since some Euro debt is so shaky, and the safer Euro countries are staying away from deficits, that basically leaves Treasuries. <br /><br />That seems to explain demand and supply fairly well, and I was just trying to tie it into a broader political economy perspective. (I'm still thinking through how all of this might work, but I think it makes sense.) By this rationale and others Germany should *absolutely* be running bigger deficits.<br /><br />Maybe America is out of control. Or maybe it's just responding to the incentives in front of it. Right now those incentives are to spend spend spend. Eventually that will change, but probably not tomorrow.Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-81441278280675523052010-05-29T05:14:02.103-04:002010-05-29T05:14:02.103-04:00You can't be serious--"deficits don't...You can't be serious--"deficits don't matter because the rest of the world demands them" is pretty novel, but...<br /><br />1. The more conventional "exorbitant privilege" argument is that the ROW of the world is made to pick up America's tab.<br /><br />2. This Amerocentric reasoning doesn't distinguish between different Eurozone debt issues. Last I checked, German bunds yielded <a href="http://www.businessweek.com/news/2010-05-28/bunds-set-for-biggest-monthly-gain-since-lehman-on-fiscal-woes.html" rel="nofollow">even lower</a> than Treasuries. So Germany should run even more massive American-style deficits, right?<br /><br />3. Consider that financial markets will probably never "normalize" in the sense that developed countries will tend to run largish deficits from here on in because of demographic factors and corresponding health and pension obligations. <br /><br />4. If US Treasuries are so safe, why on Earth would Geithner be regarded as <a href="http://www.reuters.com/article/idUSPEK14475620090601" rel="nofollow">a joke</a> at an elite Chinese university? <br /><br />Again, the best thing for the world to do is put the US econocomedians out of their misery as America is clearly out of control. This laughingstock act called America deserve its comeuppance--and I will explain how soon.Emmanuelhttps://www.blogger.com/profile/04615366847433704476noreply@blogger.com