What the Pros Say: US Is Now 'Bankrupt'
Topics:Federal Reserve | Japan | China | Treasuries | Fixed Income | Employment | euro | Banking | U.S. Dollar | Yen | Economy (Global) | Asia | Currencies | Credit | Politics & Government | Stock Market | Investment Strategy
Sectors:Financial Services | BanksBy: CNBC.com | 19 Mar 2009 | 09:56 AM ET Text Size
Global stocks traded higher, as did the dollar against the euro, Thursday after the Federal Reserve's surprise announcement it would buy $300 billion in US Treasurys in order to help the ailing economy.
But experts tell CNBC they have concerns over the Fed's latest move and that the current national balance sheet is a disaster.
US is Already 'Bankrupt'
Technically, the U.S. is already "bankrupt" because it has a debt that is almost four times the size of its economy, says Puru Saxena, CEO of Puru Saxena Wealth Management. He tells CNBC that the U.S. is at risk of hyperinflation.
CNBC.com
--------------------------------------------------------------------------------
Fed to Buy Treasurys is Not a Good Sign
Stephen Roach, chairman for Asia at Morgan Stanley does not view the Fed's plan to buy $300 billion worth of long-dated government debt as a constructive sign for prospects going forward.
Fed's Move Unlikely to Help Economy
The Fed pumping money into Treasurys won't help, says Martin Weiss, president of Weiss Research. He also discusses what can be done to turn the US economy around.
The US Stuck in Zero-Rate Mode?
America is arrogant to deny their similarity to Japan's economy, says Stephen Roach, chairman for Asia at Morgan Stanley. He tells CNBC that the US economy is in a "zero-interest rate" mode, like Japan.
Quantitative Easing & the Fed's Balance Sheet
Thomas Lam, vice president and senior treasury economist at UOB, says the Fed's latest moves such as to buy long-dated Treasurys will stretch its balance sheet and pump more liquidity into economy.
The Fed's Recent Moves are Right
"This decision to purchase long-term assets, mortgages, long-term treasury securities, is the right thing to do. The Fed would clearly rather err on the side of inflation rather then depression," said Dennis Gartman from the Gartman Letter. He also touches on the housing market in the US as well as the TALF.
Tackling US Economy
Housing problems need to be tackled before the U.S. economy can pick up, according to Adam Carr, senior economist at ICAP.
2010: 'Real Peak of the Crisis'
"We are going to see real problems in 2010 when the Fed and all the other governments which issued stimulus packages are going to try to reabsorb some of that liquidity," Nicu Harajchi, CEO & Founder of N1 Asset Management, said Thursday. He considers whether the Fed's latest move will work.
Fed's Actions Bode Well for Asia
The Fed's bold moves to support the U.S. economy is good news for Asia, believes Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide.
Redirecting China's Foreign Investments
China is unlikely to unload their dollar-denominated reserve as such a move will only hurt themselves at this point, says Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide. He tells CNBC how its foreign investment strategy may change.
Sharon Lorimer
--------------------------------------------------------------------------------
China Needs Internal Demand
China needs to change its structure to an internal demand driven economy, says Stephen Roach, chairman for Asia at Morgan Stanley. He tells CNBC that China is hugely dependent on external demand as a major source of economic growth.
ECB in "Splendid Isolation"
The ECB should be out there pumping money into the system, says Paul Donovan, MD & head of global economics at UBS. He tells CNBC that the central bank is sitting in "splendid isolation".
More Pain Ahead for Europe
There is no cause for optimism in the medium term, despite the better-than-expected data from the ZEW survey, says Par Magnusson, senior analyst at Danske Bank.
UK Due for Inflation Spike?
The UK economy is facing higher inflation down the road, Andy Hartwill from Quasar told CNBC, as Britain posted its highest ever budget deficit Thursday.
Deflation Will Hit Mid-Year
Deflation is a near-term risk that may hit global economies in the middle of the year, warns Paul Donovan, MD & head of global economics at UBS.
Preventing Runaway Inflation
When liquidity floodgates open, global central banks will have to sterilize very aggressively and in time to prevent runaway inflation. Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide tells CNBC how this can be resolved quickly.
© 2009 CNBC.com
________________________ ________________________ __
Oh boy, this is getting nuts!
