This report this morning from Bloomberg about Japanese investors dumping, or at least not buying more, U.S. Treasuries, is extremely worrisome, especially if it's followed by similar thoughts and actions by the Chinese and other big buyers.
I've been telling audiences for several years that this was inevitable if the U.S. kept flooding the market with additional debt and the value of the dollar kept depreciating. The response typically was an Alfred E. Neuman-like "what-me-worry?" approach. At least one person usually said that the Chinese in particular had to keep buying Treasuries because they couldn't afford for the U.S. -- their biggest customer -- not to be able to continue to buy Chinese products.
That may be true if the buyer is the Chinese government, or any fund controlled by the government. But as this article points out, the initial decision at least may be made by private sector investors rather than governmental entities who are far less concerned with the big picture than with maximizing their own profits.
I've been busy this past week with my day job as director of the Nelson A. Rockefeller Center at Dartmouth. The year 2008 marks two anniversaries for us: 100 years since Nelson Rockefeller was born and 25 years since the Center was founded at Dartmouth. We are using the coincidence of the Centennial with the 2008 elections to examine Rockefeller's legacy in the three decades since he retired from public office.
Here's this week's column from Roll Call.
What It’s Called Is More Important
Than What’s Done
You really can’t help but be impressed at the extraordinary efforts the White House and Congress make during a federal budget debate to get people to think they’re doing something different than what’s actually being done.
The typical way is to give what they’re doing a new and totally misleading name so they can get people to agree to something they would never agree to otherwise.
The best example used to be the “death tax.”
Several years ago, when the opponents of the federal estate tax decided to make a serious effort to get it reduced or eliminated, they came up with the absolutely brilliant public relations strategy to build support by changing its name. Instead of the estate tax, they started to refer to it as the death tax.
Today is the one-month anniversary of the new and improved Capital Gains and Games.
It's been a great four weeks for Andrew, Pete, Troy, and me. Although I had worked with everyone else individually before the new CG&G began, I never imagined that the chemistry that has developed between we four bloggers-in-crime would be as good as it has become in such a short period.
And the comments...that is, your comments...have been a source of wonder and inspiration. Please keep them coming, and coming, and...
CG&G isn't getting any younger, so we already have some new things planned. For example, podcasts featuring one or more of us are not that far away. And if we're doing audio, can video be that far behind?
On behalf of everyone at Capital Gains and Games, many thanks. We'll all talk to you soon.