The World's Biggest Bond Investor on the US Downgrade

A._Badger

gagahouse wrote: »

Other state backed state institutions which are not casino banks, like cantonal banks, post office or some private banks, at least where I live in CH.

As for the "guarantee" scheme in the UK, there is supposed to be a fund payed for by contributions from all the banks to cover the default of a member which the FSCS pays out on. Relative to the trillions in deposits it couldn't possibly cover the failure of a large UK bank. So the govt will make depositors whole by either nationalizing them or printing the difference while it has a primary budget deficit.

But what do you do about any amounts you have over £85k even after exhausting spreading it across multiple banks?

Yes, the situation is clearly different in Switzerland - but then, it always is.

Fortunately, I don't have to worry about where to spread my meagre wealth beyond the major banks but thanks for the response, which was interesting.

michaels

100% agree with this - Chinese are terrified about the social unrest that a recession and unemployment would bring - especially with all those extra young men, if it happens i can see an invasion of Taiwan to be used as a Nationalistic distraction. What then happens if the US cancels all the T-bonds China is holding?

pqrdef wrote: »

China should be more worried about a reduction in US demand for its products. It's built its economic miracle on American spending. The last thing it needs now is the Tea Party turning off the tap.

Wookster

vivatifosi wrote: »

Thanks Gen. In terms of the changes he talks about, it is interesting that the Chinese have already come out and blasted the USA:

"The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor's (S&P) for the first time on Friday."....

..."China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets."

http://news.xinhuanet.com/english2010/indepth/2011-08/06/c_131032986.htm

Their hypocrisy knows no bounds. When the Yuan floats freely then they can wax lyrical about economics. Until then they need to !!!!!!!

StevieJ

Just had a look at US bonds and the yield has gone down, so much for S&P

IronWolf

Wookster wrote: »

Their hypocrisy knows no bounds. When the Yuan floats freely then they can wax lyrical about economics. Until then they need to !!!!!!!

why on earth would they do that though? They want the money back they lent to the US, and don't they deserve that rather than to see it disappear into a black hole because of currency appreciation?

Generali

StevieJ wrote: »

Just had a look at US bonds and the yield has gone down, so much for S&P

The yield has now risen on the short dated stuff and fallen on the longer dated bonds.

There's plenty of red ink in the equity markets but it's hardly a panic. It reminds me of one of those rubbish 1940s detective movies: "It'sh quiet....too quiet".

Ark_Welder

Generali wrote: »

The yield has now risen on the short dated stuff and fallen on the longer dated bonds.

There's plenty of red ink in the equity markets but it's hardly a panic. It reminds me of one of those rubbish 1940s detective movies: "It'sh quiet....too quiet".

Careful! There is a danger that this could be described as approaching 'normal circumstances'!

Falling share prices due to expectations of low/no growth or recession, and falling bond yields due to a flight to safety...!

purch

They've got to buy something :eek:

The US is the biggest issuer of Paper, so there is a lot of it to buy after you've sold everything else.