International Event (ex: Syria war) May Precipitate AfterShock Economy


International Event (ex: Syria war) May Precipitate AfterShock Economy

A Wiedemer Aftershock can be precipitated via an international event.  An international event can persuade our foreign creditors to stop buying our Treasury debt and dump 100’s of $billions over one day.  The reasons may be political or economic or both.  Purchasing US debt while a new US war begins means that the US will need more debt, will encounter slower GDP growth, thus be in a poor position to repay debt.  Hence that would be a poor investment.

Debt-300x300

Politically, if the US agitates two of main creditors China and Russia over their strategic interests (such as Syria), China and Russia may for political and economic immediately dump our debt and additional $billions of US denominated securities (yes – stocks too).

Therefore please join me in tweeting and contacting our COngressiona representatives to vote NO for any military action against Syria.

As @Economics501 I tweeting yesterday to many Congressmen:

#NoSyriaWar $ will collapse. China will no longer buy US debt.

For great details please visit:

http://www.infowars.com/who-is-going-to-buy-our-debt-if-this-war-causes-china-russia-and-the-rest-of-the-world-to-turn-on-us/

here is snippet

So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?

In a word, it would be disastrous.  The U.S. government will borrow about 4 trillion dollars this year.

Close to a trillion of that is new borrowing, and about three trillion of that is rolling over existing debt. If China and other big foreign lenders quit buying our debt and started dumping what they already hold, that would send yields on U.S. Treasuries absolutely soaring. And we have already seen bond yields rise dramatically in recent weeks.  In fact, on Thursday the yield on 10 year U.S. Treasuries briefly broke the 3 percent barrier

 

For details about what an Aftershock may be please read – https://economics501.wordpress.com/2011/11/25/aftershock-economy-book-review/

Twitter@Economics501

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About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
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