w1ld wrote:
] ] Others agreed, but note that Bush and U.S. taxpayers may
] ] have a few years' breathing room. "Right now, we're
] ] floating along because the Japanese and Chinese are
] ] financing our debt by buying government bonds," said Mark
] ] Votruba, assistant professor of economics at Case Western
] ] Reserve University.
] ]
] ]
] ] "There's going to come a day when they're not going to do
] ] that. Then the only way to sell our debt will be to
] ] increase the interest that we pay on bonds, and that
] ] means all interest rates are going to go up," he said.
] ]
] ]
] ] But that might not happen for a few years, Votruba said.
] ] "If the dollar starts falling in value and we see any
] ] sort of change with the Chinese and Japanese not buying
] ] our bonds so we have trouble selling Treasury bonds, then
] ] there will have to be some kind of response. If it
] ] doesn't happen in the next four years, it'll happen soon
] ] after that. That's my prediction," he said.

I think I said something like this in a different set of boards about 18 months ago. The real problem isn't a "correction" it's what happens when they say, "You know what? We're not going to buy anymore of these. You guys look so overextended that we want to see you pay some of this down before we're going to keep buying." At that point Black Friday and the Great Depression come right back around.

To explain this better, everyone was terrified after "Black Thursday" in 1987. Nothing really happened out of that. The reason nothing happened was because the government stepped in (like they should have 75 years ago) and said, "Money? Sure, we've got it, here you go." The problem is, when it's the government that needs they money, they need to get it from somewhere, and that's T-Bills. When the T-Bills stop going out, the money stops coming in, and the T-Bills coming due are ones that there isn't any money from.

The day that happens, we turn into Russia.