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Julian Robertson, legendary investor, expressed what I believe to be the critical immediate problem facing the US (and the rest of the world). With my emphasis added, he said the following:
I prefer to run scared through here. I think that if the Chinese stop buying our debt, it is virtually the end of the financial world as we know it. The conventional thinking is that they will continue buying. But I don‟t think it’s logical to assume somebody will continue to buy our paper which declines in value. Our dollar is declining in value, and it’s been pretty shocking over the last four or five months. The politicians who are so tough on businessmen and so critical – they and the Federal Reserve caused us to be in this predicament. What really caused me to predict the problems we had in 2007 and 2008 was that we were spending so much and no one was balancing the budget. No family can keep doing that forever, no corporation can keep doing that forever and no nation can continue doing that forever. We did it on all three fronts – and it blew up in our face.
Robertson speaks of what happens if/when the US can no longer depend on the “kindness of strangers” to fund our deficits. If/when our benefactors stop lending us money, both Treasury bonds and the US currency will collapse. As he alludes , bonds and currency are merely symptoms of underlying problems. While
Continue reading Dollar and Treasuries — Once Again
