China being the largest expected lender to the US financial debacle being proposed by Paulson and Bernanke I strongly recommend everyone read Asia Times throughout this meltdown. The US credit rating with Standard & Poor, Moody and Fitch may be reduced significantly by this bailout plan… and add fuel to the fire.
Foreign holders of dollars are unlikely to finance ever-growing US current account deficits but will instead convert their dollar holdings into stable currencies or gold. This would, in turn, cause a major economic contraction in the US, possibly exceeding 10%. That will have adverse repercussions on international trade and these will be reinforced by exchange-rate instability. Asian economies will be seriously affected. Furthermore, as recent experience has shown, substantial dollar depreciation will cause dangerous commodity price inflation. With the expected MFI-induced dollar depreciation, energy prices can rebound to exorbitant levels, accentuating further inflation and undermining economic growth.
All of this cannot but impair the global financial and economic reputation of the US. Just in a matter of days the dollar has declined from $1.39 to $1.48 to the euro, oil has climbed from $90 to over $120 (at one point rising by more than $20 in one day, September 22) and gold has jumped from $750 per ounce to over $900 .
From the Canberra Times we have this chilling assessment. Nice to know we are now viewed as a socialist country by the rest of the world
After Comrade George W. Bush nationalised the two giants of the US mortgage market, Freddie Mac and Fannie Mae, earlier this month, Anatole Kaletsky wrote in The Times of London that ”the most capitalist administration ever, in the world’s most capitalist country, [has] decided to wipe out the private owners of its biggest and most important financial companies and replace them with state-appointed bureaucrats”.
Wikipedia defines ”nationalisation” as ”the act of taking an industry or assets into the public ownership of a national government. It is a central theme of certain brands of state socialist policy that the means of production, distribution and exchange should be owned by the state … Nationalization may occur with or without compensation to the former owners. If it takes place without compensation it is a case of expropriation.”
Well, this was expropriation. When the US investment bank Bear Stearns went belly-up in March, the shareholders used their political influence to get the price of the buy-out raised from the originally agreed $2 per share to $10 per share.
