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It's the end of the world as we know it and I feel fine

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15 REPLIES 15
Wizard
Super Contributor
Very good article Simon! The Chinese story has been foreseeable for some time. Our kids will learn Chinese in school. China made a bad investment buying US debtA.but theyA'll get over it! GoldA's primary trend is upA..follow the trend and make money! Remains to be seen whether they will sell it like in 08A'
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SimonPB
Valued Contributor
gold a whisker below 1700 this morn ..
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Terra
Super Contributor
Dr Clive Roffey must be a Happy Chappie :-)
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SimonPB
Valued Contributor
well yes, you know what they say about broken clocks ..
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richardw
Super Contributor
China's not 'investing' in US debt. They have to buy it to keep their currency pegged to the dollar. If they let go of the peg they become less competitive. If their growth drops by even a couple percent they risk political instability.

Here's a graph of China vs America GDP. We have a little while to go before they overtake:
http://bit.ly/oMBITI
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Terra
Super Contributor
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Wizard
Super Contributor
Gold is still nothing. If the broken clock DRD which is buried 2m underground gets to work, then you will some serious Roffey fireworks !
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Not applicable
Ah, the wonderful financial world and its mountain of hypocrisies. The entire financial world allows itself to be dictated to by a private company - amazing. The very same company that whitewashed all the subprime junk in the previous decade. The very same company that now rates the US as a more risky bet than France (with all of its banks heavily exposed in the PIGS debt), little, lowly Australia, Lichtenstein???). And because now, the financial world has in many instances decided to automate its processes (presumably to remove the thought processes out of the lower ranks), the very same rules they set themselves will cause them to react unnecessarily.
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richardw
Super Contributor
Don't think it's entire financial world, otherwise we'd drop 20%. It's just a small acceptance that if the US is going to play games with their debt then they don't deserve the title of "riskless". Riskless is where you know, absolutely, that they won't ever not pay you. Ever. They won't even threaten and they won't make you wait a day longer than they promised. Frankly right now Australia is easier to make that assumption of than the US Congress.
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SimonPB
Valued Contributor
ya the downgrade is as much about the US political system and its inability to compromise as it is about the debt .. politicians add risk and in the US they add lotsa risk ..
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richardw
Super Contributor
Bigtime. Imagine if a Tea Party person ever got into the White House. S&P would be playing catch-up, shooting every rating the US has.
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Not applicable
My point is that we have a private enterprise that has the power almost of life and death over countries and companies, and their track record is less than exemplary. Quis custodiet ipsos custodes?
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SimonPB
Valued Contributor
sure, and frankly they were the Arthur Anderson of the 08 crisis but escaped unharmed ..
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Not applicable
Except that AA has a contractual duty to report the truth, i.e. a fiduciary duty (I think - any lawyers out there to comment?). S&P is not beholden to anyone - they are owned by a bleeding publishing company! (Mcgraw Hill, anyone recognize the name?)
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richardw
Super Contributor
And Moody's is partly owned by Buffett, who thinks the US deserves an AAAA rating. What are the odds they downgrade?
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