] A move by China to revalue its currency "does not follow
] that that will lower our overall trade balance,"
] Greenspan said. "Indeed, it's probably quite unlikely."
]
]
] That's because companies are likely to turn to other
] countries, such as Thailand or Malaysia for goods, rather
] than U.S. producers. "So essentially what we will find is
] we're importing from a different area, but we will be
] importing the same goods," Greenspan said.

Yes, more mainstream news sources... Here's something that I don't think these guys have considered though. Everyone wants China to de-link, the "real" value of the yuan is something like 50% higher than what it trades at. So the real problem lies in the fact that the Chinese are holding something on the line of half a TRILLION to a TRILLION dollars worth of the current US national debt.

De-linking the currency will mean the value of those holdings will take a HUGE hit. So before they de-link, they have to dump those. But of course, they can't, because dumping that much on the market would cause the value to tank anyway. Catch-22.

The Chinese option at this pont is, take a huge hit to their economy, or let us take a huge hit to ours (with a secondary one to theirs) At some point some bean counter will getthis all figured out and the dominoes will get shoved, but either way, I don't see anything pretty coming out of this one.

Greenspan: China Revaluation Won't Help

] "Taxpayers had better buckle up because we will be in for
] a bumpy ride of bailout after bailout, as more and more
] corporations dump their pension plan obligations on the
] PBGC," said U.S. Rep. Jan Schakowsky, D-Ill., referring
] to the Pension Benefit Guaranty Corp. that already is
] operating at a more than $23 billion deficit.

So let me see if I have this right. Personal bankruptcy (primarily caused by medical bills that have skyrocketed) is now much harder to do, at the same time these guys can dump off things that they agreed to in contract decades ago? AND we get stiffed with the bill as it gets handed off to the government?

United Gets OK to Dump Four Pension Plans

] Shares of GM fell almost 6 percent and Ford shares
] declined 4.5 percent after Standard & Poor's Ratings
] Services downgraded the debt to below investment grade,
] which is commonly known as junk or high-yield status.

Sayonara US auto companies.

S&P Cuts GM, Ford Credit Ratings to 'Junk'

] He said that while the U.S. economy was "doing well," the
] danger was that deficits would keep rising as a
] percentage of total national output.
]
]
] "Unless that trend is reversed, at some point these
] deficits would cause the economy to stagnate or worse."

Thanks for the update Alan, I think there is a long list of people who have been saying this for decades.

Greenspan Warns Deficits Endanger Economy

] The current account trade deficit is closely watched by
] economists because it is the broadest measure of
] international trade, covering not only trade in goods but
] also trade in services and investment flows between
] nations. The deficit for 2004 was not only a record in
] dollar terms but also as a percentage of the total U.S.
] economy, climbing to 5.7 percent of the gross domestic
] product, up from 4.8 percent of GDP (news - web sites) in
] 2003.

And the bleeding continues. Something else of note, elsewhere in the article they make the point that the dollar has been on a three year slide, meaning foreign goods are getting more expensive, yet the trade imbalance continues to grow. Something in that says there is a huge problem.

"Don't cry for me Argentina..."

Trade Deficit at All-Time High of $665.9B

] The dollar fell on Tuesday, as market worries that
] central banks were diversifying reserves out of U.S.
] assets pushed the currency below key technical support
] levels.

This is the sort of thing that I brought up months ago. A bit fasrther down the article it notes that South Korea holds about $69 Billion in US debt. This brings us right back to the original question, "What happens when the government decides to do some borrowing and no one takes the loan?"

Dollar Falls on Reserve Shift Worries

] As traders cleared off their desks ready to ring in the
] new year, the dollar was on track for a dismal fourth
] quarter. The U.S. currency shed 10 percent against the
] euro and Swiss franc in the last three months.
]
]
] Against the yen, the dollar fell around 7 percent in the
] quarter.
]
]
] In the absence of any convincing signs of a substantial
] rebound in the greenback, traders added to their bets
] against the currency going into 2005.
]
]
] "If anyone is out there looking for a correction in the
] dollar, it just hasn't happened and there's no sign that
] it's going to happen in the upcoming days," said
] Investors Bank and Trust's Mazanec.

And the continuing tanking of the dollar continues.

Dollar Falls to New Low Vs Euro

] The Next Four Years - borrowed time

And now to throw some gasoline on the economic bonfire, Princeton economist Paul Krugman...

The Next Four Years - borrowed time

] Stephen Roach, the chief economist at investment banking
] giant Morgan Stanley, has a public reputation for being
] bearish.
]
] But you should hear what he's saying in private.
]
] Roach met select groups of fund managers downtown
] last week, including a group at Fidelity.
]
] His prediction: America has no better than a 10
] percent chance of avoiding economic ``armageddon.''
]
] Press were not allowed into the meetings. But the
] Herald has obtained a copy of Roach's presentation. A
] stunned source who was at one meeting said, ``it struck
] me how extreme he was - much more, it seemed to me, than
] in public.''

I don't think this is a big surpise to people who have been watching this sort of thing, the fact people with big bank accounts are starting to say it should be frightening.

BostonHerald.com - Business: Economic `Armageddon' predicted

] Although completely unreported by the U.S. media and
] government, the answer to the Iraq enigma is simple yet
] shocking -- it is in large part an oil currency war.

This was recommended by doddster98 as something to read coming off my concern about the continuing fall of the dollar. After reading through it is something that deserves it's own thread.

I was both impressed by the piece and curious to find out who this guy actually is. I mean I say this and it makes sense, but I could be just another conspiracy wacko. The answer to who the writer is came from Amazon of all places. "William Clark is Manager of Performance Improvement at Johns Hopkins University School of Medicine. His research on oil depletion, oil currency issues and U.S. geostrategy received a 2003 Project Censored award, published in Censored 2004. He lives in Columbia, Maryland."

This piece is VERY dense, but more than worthwhile reading. There are reasons for maintaining good relations with your allies.

Revisited - The Real Reasons for the Upcoming War in Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, by William Clark, updated: Jan 2004