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<blockquote data-quote="clueless" data-source="post: 726207" data-attributes="member: 15572"><p>Good points made so far--yes, the U.S. can end up in the same predicament <em>one day-</em>-no time soon though...we are still <em>the</em> safe haven for investment $$. When a Chinese official was asked once whether or not China would keep buying our debt or would they pull out of our debt markets, he replied "where else would we go?" That about sums it up. So, the primary problem of financing large budget deficits--paying higher interest rates--is minimized when the demand for our debt instruments remains strong. There was a research article published by the Federal Reserve regarding debt-free borrowing by the U.S. that further mitigates concerns that our debt problem will attain Greece-like proportions in the immediate future. Here it is for those interested:</p><p></p><p><a href="http://www.newyorkfed.org/research/staff_reports/sr271.pdf" target="_blank">http://www.newyorkfed.org/research/staff_reports/sr271.pdf</a></p><p></p><p>So, for the time being, we are not in danger of becoming another 'Greece'. Down the road, that's a different matter altogether. </p><p></p><p>Totally agree about the politicians not being able to look past their next election, but as far as the rest of Europe not bailing out the PIGS--they will do it with strings attached, but I don't see that they have a choice if they want to avoid the contagion it would cause.</p></blockquote><p></p>
[QUOTE="clueless, post: 726207, member: 15572"] Good points made so far--yes, the U.S. can end up in the same predicament [I]one day-[/I]-no time soon though...we are still [I]the[/I] safe haven for investment $$. When a Chinese official was asked once whether or not China would keep buying our debt or would they pull out of our debt markets, he replied "where else would we go?" That about sums it up. So, the primary problem of financing large budget deficits--paying higher interest rates--is minimized when the demand for our debt instruments remains strong. There was a research article published by the Federal Reserve regarding debt-free borrowing by the U.S. that further mitigates concerns that our debt problem will attain Greece-like proportions in the immediate future. Here it is for those interested: [url]http://www.newyorkfed.org/research/staff_reports/sr271.pdf[/url] So, for the time being, we are not in danger of becoming another 'Greece'. Down the road, that's a different matter altogether. Totally agree about the politicians not being able to look past their next election, but as far as the rest of Europe not bailing out the PIGS--they will do it with strings attached, but I don't see that they have a choice if they want to avoid the contagion it would cause. [/QUOTE]
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