$277 billion into stock funds so far this year; highest since 2000

[sgd]

I see they have no choice. They sell bonds is to raise money to pay earlier debts so yes it is become an addiction. But If nobody buys their bonds and they default is a far worse outcome, everybody knows something bad will happen but nobody has any idea how big it will be.

Though china has the largest holding of treasury debt outside US at over 1.4 trillion it is the the americans themselves who own most of their own debt over 12 trillion a lot of american's 401k pensions are used to buy these treasuries. So if they don't prop up their own debt they will be the biggest losers if there is a default.

And if theres a default they are screwed over there we are screwed over here as well, all the big mnc here that make your S$ strong if they go belly up the end is nigh adios!

[valuebuddies]

I can only say that unlimited QE is a worst mistake that the American made, it ignited not only a currency war, but also the bubbles all over the world. A lots of skyscrapers are being built in Beijing, Tainjin, Shanghai and other emerging cities, according to the skyscraper index prediction (eventhough it makes little sense to me), the bubbles are about to burst. When this crash, it will be very jiak lat, probably the worst recession and depression in the history. Having said this, I am still optimistic on the stock market for the year 2014

[specuvestor]

I see they have no choice. They sell bonds is to raise money to pay earlier debts so yes it is become an addiction. But If nobody buys their bonds and they default is a far worse outcome, everybody knows something bad will happen but nobody has any idea how big it will be.

Though china has the largest holding of treasury debt outside US at over 1.4 trillion it is the the americans themselves who own most of their own debt over 12 trillion a lot of american's 401k pensions are used to buy these treasuries. So if they don't prop up their own debt they will be the biggest losers if there is a default.

And if theres a default they are screwed over there we are screwed over here as well, all the big mnc here that make your S$ strong if they go belly up the end is nigh adios!

As of March 2013

Out of US$16.77 trillion US public debt, Govt and federal reserves own $6.66trillion and Foreigners own $5.72tr
http://www.fms.treas.gov/bulletin/index.html

That is why they are dependent on foreigners buying vs 90% of Jap debt is owned by locals. Italy's govt debt , despite all the anxiety, is about 2/3 owned by locals IIRC. So sometimes we need to check the facts amongst the noise.

[kagemusha]

Obviously everyone knows that this is not sustainable. No one is really complaining as people are benefiting from it. Everyone is also aware that the US is treating everyone as suckers by printing money but all LL because it is the default global currency. Unless the status quo change, why should US do anything to change the way they are operating? Fiscal deficit? No problem, print them, the world will pay for it.

[Temperament]

I see they have no choice. They sell bonds is to raise money to pay earlier debts so yes it is become an addiction. But If nobody buys their bonds and they default is a far worse outcome, everybody knows something bad will happen but nobody has any idea how big it will be.

Though china has the largest holding of treasury debt outside US at over 1.4 trillion it is the the americans themselves who own most of their own debt over 12 trillion a lot of american's 401k pensions are used to buy these treasuries. So if they don't prop up their own debt they will be the biggest losers if there is a default.

And if theres a default they are screwed over there we are screwed over here as well, all the big mnc here that make your S$ strong if they go belly up the end is nigh adios!

As of March 2013

Out of US$16.77 trillion US public debt, Govt and federal reserves own $6.66trillion and Foreigners own $5.72tr
http://www.fms.treas.gov/bulletin/index.html

That is why they are dependent on foreigners buying vs 90% of Jap debt is owned by locals. Italy's govt debt , despite all the anxiety, is about 2/3 owned by locals IIRC. So sometimes we need to check the facts amongst the noise.

It make sense. Who (outsiders) wants to buy a Government's Bond that is not the world reserve currency. US $ is still the only $ welcome in most countries.
Anyway does US has to default on it's debt?
No need lah.
Just by printing more and more money, US can "settle" her debt already.

[specuvestor]

As US$ is still the dominant currency, liquidity flows out of US$ bonds goes to US$ equities. It is still US assets

Europe trying to challenge that with EUR. And I suspect China will succeed somewhat in Asia x Japan with RMB in next 10 years

Being the dominant reserve currency in a fiat system has a lot of advantages. When that status is eroded, US interest rates and economy will certainly be impacted

[arthur]

Being the dominant reserve currency in a fiat system has a lot of advantages. When that status is eroded, US interest rates and economy will certainly be impacted

I absolutely agree. However the time period of 10 years is still unknown. Chinese government is very cautious, perhaps we will only see the downtrend of USD spread over many decades.

The mighty GBP was once the preeminent world currency till 2 world wars ravages it. So I believe USA will not be reduced to a non-important position in the world. It should still be a great power, rather like what Britain or Germany is now in the current context.
Rather, it won't be able to enjoy the significant economic/political advantages it enjoys now for having the world' reserve currency.

Hopefully GIC/Temasek will take all these into account. Don't keep investing using the previous decade performers. Be forward-looking.

I believe our children and grandchildren will live in very interesting times. We should actually educate them on our past history so that they can take advantage of our knowledge into the next century.
No point letting them invest according to some fund managers advices of their era.

Cheers

[specuvestor]

Totally agree. It takes a generation for GBP to be replaced.

Don't get me wrong, I am NOT saying USD will be replaced anytime soon but the dominance challeged by RMB in Asia ex Japan, and EUR in EMEA, probably gradually in next 10 years. The rest of the world is not stupid but more boh-bian. The most important source of US$ REAL demand is commodities including gold and oil. When those are traded in non-USD we will know it is the beginning of the end. That's what some were trying to do a fast one during GFC.

Cheers

[opmi]

how about investing in HKD financial assets? backdoor to RMB with >10% discount...hahaa....

[arthur]

Totally agree. It takes a generation for GBP to be replaced.

Don't get me wrong, I am NOT saying USD will be replaced anytime soon but the dominance challeged by RMB in Asia ex Japan, and EUR in EMEA, probably gradually in next 10 years. The rest of the world is not stupid but more boh-bian. The most important source of US$ REAL demand is commodities including gold and oil. When those are traded in non-USD we will know it is the beginning of the end. That's what some were trying to do a fast one during GFC.

Cheers

Thanks Specuvestor.

What are your thoughts on EUR and GBP?
Frankly, I am having some reservation on EUR, being itself a supranational currency, which enjoys monetary union but no fiscal union.

Ultimately, I can't see its future without fiscal union having one Monetary Central Bank setting limits for all EU countries.

Having some European friends who are still lambasting the socialist policies of their nations, I doubt Europe will get out of this crisis as fast as they proclaimed.
Some Europeans are calling this a lost generation for their youngsters. Young graduates who can't find a job. No experience, can't migrate. Sad but true.