好迷茫

美國經濟情況很壞, 但美元大升, 來緊會發生乜事 ？
都係把美元定期到了期轉活期, 可以走得快些 ...........

The Bankruptcy of America
On the other hand, their source seems reliable: Gokhale and Smetters got their data from the U.S. Department of Treasury. And they performed their present value calculations on the order of then Secretary of the Treasury Paul O'Neill. Smetters was, until recently, on staff there, as the Deputy Assistant Secretary for Economic Policy. The Treasury needed new numbers because the Office of Management and Budget's numbers have almost no connection to reality. (For example, OMB projects a constant 75-year average lifespan in its Social Security and Medicare cost estimates even though the average lifespan in America is already 78...and increasing at the rate of three months every year.)

When you look honestly at our government's future obligations, the numbers in the red quickly become so large they require entirely new measures to describe them. Gokhale and Smetters invent the term "financial imbalance," to measure Uncle Sam's impending bankruptcy. Financial imbalance means: "current federal debt held by the public plus the present value of all future federal non-interest spending minus the present value of all future federal receipts."

Or, in other words, Gokhale and Smetters use FI (financial imbalance) to estimate how broke Uncle Sam is when measured in constant dollars, today. FI is how much Uncle Sam owes now and will garner in the future versus how much he is on the hook for now and later.

And the number?

"Taking present values as of fiscal-year-end 2002 and interpreting the policies in the federal budget for fiscal year 2004 as current policies, the federal government's total fiscal imbalance is equal to $44.2 trillion."

Huge numbers like $44.2 trillion don't mean much to anyone without a comparison. So, consider: Uncle Sam's "financial imbalance" is 10 times the size of our current national debt.

In order to achieve current solvency, the government would have to raise payroll taxes by 68.5%, beginning today. Alternatively the government could cut Social Security and non-Medicare outlays by 54.8% immediately and forever. (How do you think either policy would go over at the polls?)

It's unlikely that either huge tax hikes or huge Social Security cuts will occur. Most likely nothing will happen. And so, the government's insolvency will grow much larger. By 2008 FI will reach $54 trillion. To reach solvency at that point, taxes would have to increase by 73.7%.

Looking at the government's finances in a serious way is like expecting a Ponzi scheme operator's numbers to add up. They don't. And they never will; that's the game. Making political promises is easier than paying for them. Theoretically these debts could be inflated away by printing more dollars. But legally this would require the repeal of the 1972 Social Security Act, which pegs benefits to inflation.

And that will not be a simple matter.

Worse, these financial imbalances stem from direct wealth redistribution, from one generation to the next. They're a disincentive for saving and investment. They hinder current growth today while bankrupting America tomorrow. But politically they're sacred cows.

Ironically, the people most threatened by this hydra-headed financial and political monster are the very same people these programs were designed to benefit: the middle class.

Your typical 50-year old, middle class American isn't prepared to retire without a lot of help. In fact, most baby boomers will never even pay off their mortgages. Lawrence Capital Management notes in the last 19 quarters total mortgage debt increased by $3 trillion (+58%). To put this in perspective, prior to 1997, it took 13 years to add $3 trillion in mortgage debt. Or, said another way, before 1997, around $50 billion a quarter was being borrowed against homes. Today the run rate is near $200 billion per quarter, or four times more. Household borrowings now total $8.2 trillion in America and they continue to grow at near double-digit rates.

And it's not just mortgage debt that's problematic...

According to the Federal Reserve Bank of St. Louis, US household consumer debt is up more than 12% from last year. Debt service, as a percentage of disposable income, is above 14%. Only twice in the last 25 years has debt service taken as large a chunk of America's income -- and that's despite the lowest interest rates in fifty years.

When you look at these numbers you quickly see the problems our favorite weekly scribe, John Mauldin, hopes we can "muddle" through: The government is making promises it can't keep without bankrupting the nation; the individual American has made promises to his bank he can't keep without bankrupting his family. And we haven't even looked at the biggest borrowers yet - corporations.

Corporate America has been on a borrowing binge for most of the last 25 years. Even the very best companies are now loaded up with debt. GE, for example, has been a net borrower since 1992.

And IBM borrowed $20 billion during the 1990s, while at the same time buying back $9 billion worth of its stock on the open market. Why would you take on expensive debt while buying back even more expensive stock? It made the income statement look good, converting debt to earnings per share. And that made Lou Gerstner's bank account look good, because he got paid in options whose value was influenced by earnings growth. Meanwhile the balance sheet was covered in the concrete of debt.

Then there's Ford - one of America's greatest companies. Debt on the balance sheet is now 24 times equity.

Lower interests rates aren't necessarily helping, either.

Yes, firms can restructure debts and improve earnings thanks to lower interest expenses. But these lower interest rates are also keeping companies that should be bankrupt, alive. Consider Juniper Networks, which shows a cumulative net loss of $37 million after ten years in business. Despite having over $1 billion in debt, Juniper was able to close a $350 million convertible bond deal that pays no interest coupon two weeks ago. The company is borrowing $350 million dollars until 2008 for free. Bankers say similar deals are closing at the rate of two a day.

Why? Because investors once burned by stocks are now plowing into bonds. Through April of this year, investors sank $53.7 billion into bond funds, compared to only $4.5 billion into stock funds.

he money isn't going into new capital investment. Instead, this "free" money is paying off more expensive, older loans. Corporate America is repairing its balance sheet. The ratio of long-term debt to total liabilities now stands at 68.2%, the highest level since 1959, according to economist Richard Berner of Morgan Stanley. And cash is staying put: corporate liquidity (current assets minus current liabilities) is at its highest level since the mid-1960s. The combination of cash and extended debts is easing the credit crunch. Bond yield spreads have narrowed between investment grade bonds and government treasuries, from 260 basis points in October 2002 to only 108 basis points currently.

You can also see this new debt isn't creating new demand by looking at capacity utilization. If businesses were spending again, capacity utilization would be up. It's not. Across the board in our economy, capacity utilization has fallen from around 85-90% in 1985 to below 75% today, according to the Board of Governors of the Federal Reserve System. The data makes sense: areas of our economy that had the biggest investment boom show the biggest decline in capacity utilization today. Capacity utilization in electronics, for example, has declined from 90% in 1999 to under 65% today.

In the long term, debt restructuring does absolutely nothing to improve America's economic fundamentals. Lower interest rates aren't spurring new investment or new demand. More debt only postpones the day of reckoning. Thus, the current bond market mania is just the corporate version of the consumer's home equity loans: We're buying today what we couldn't afford yesterday...

.....................

Inflation and the Fall of the Dollar

Like John, I'm sure we'll find a way to muddle through. In the end - even if there's more deflation in the short term - our government will end up monetizing its debts. Greenspan and others at the Fed have already mentioned they're prepared to buy large amounts of long-dated Treasury bonds. Retiring Treasury obligations with dollars the Fed prints will cause a weaker dollar. That means, sooner or later, inflation will be back -- and in a big way.

This is the real endgame, as I see it. Let me explain.
One of the smartest and best investors I've ever met, Chris Weber, says we're entering the third dollar bear market. And if there's anyone worth listening to when it comes to the currency, it's Chris Weber. Starting with the money he made on a Phoenix, Arizona paper...

.................

And Chris thinks this - the third dollar bear market - will be much worse than the last two. This time the falling dollar might lead to the end of the dollar as the world's only reserve currency. He's not the only one who thinks so. Doug Casey sees this happening too. And I believe it's not an unlikely outcome.

Why? Because the imbalances inside the U.S. economy have never been this large, nor has our current account deficit ever been this big and never before has the United States been more dependent on foreigners for oil.

This possible move away from the dollar as the primary reserve currency for the world is high-lighted by a recent comment from Dennis Gartman (The Gartman Letter):
..................
What should you do? Imagine the 1970s, but on an even bigger scale. Doug Casey says fair value for gold right now is $700 an ounce. And he expects it to go to $3,000. It's hard for me to imagine that he's right. But then I look at my fellow American's finances, at Uncle Sam's balance sheet and the mockery corporate America has made of accounting standards...and suddenly gold looks pretty good.

Dr. Sjuggerud compiled this list of the annual returns of various asset classes from 1968 to 1981, during the last major collapse in the dollar:

19.4% Gold
18.9% Stamps
15.7% Rare books
13.7% Silver
12.7% Coins (U.S. non-gold)
12.5% Old masters' paintings
11.8% Diamonds
11.3% Farmland
9.6% Single-family homes
6.5% Inflation (CPI)
6.4% Foreign currencies
5.8% High-grade corporate bonds
3.1% Stocks

Chances are pretty good that you don't have a big position in these assets (with the exception of housing). It might be time to consider moving some of your savings out of stocks and bonds and into things more attuned to the declining value of the dollar.