Monday, June 04, 2007

Brad Setser on the US Deficit

Brad Setser hits on a point that is not widely covered. the us has to serve their debt and this is becoming more and more a heavy burden on the current account deficit. especially after all the "cheap" debt from the past is rolling into higher bad that the us abandoned the 30 year .....has and with 59 trillion future liabilities the problem will only get worse..... . make sure you read the entire brilliant piece from Setser and click on the headline!

Brad Setser beleuchtet hier mal wieder einen punkt der ansonsten in der diskussion oft vergessen oder unterschätzt wird. die zinslast die die usa aufbringen müssen um ihre gewaltigen schulden zu finanzieren wird immer mehr zu einem problem und lässt das defizit weiter ansteigen. das gilt besonders weil die billigen krediten jetzt in teurere refinanziert werden mü rächt sich das die usa die 30 jährige staatsanleihe eingestampft haben ....und mit zukünftigen verpflichtungen von 59 trillion $ dürfte das problem nicht kleiner werden.....lest bitte unbedingt den ganzen bericht von Setser und klickt auf die überschrift!

I think the income balance is poised to deteriorate significantly. That is the real source of my pessimism. The market no longer expects the Fed to ease by much. Short-term rates will stay around 5%. And long-rates have moved close to 5%. That suggests to me that the interest bill on the United States external debt is set to rise: the US will be taking on new debt at 5% plus to cover its deficit, as well as rolling over an awful lot of old debt at higher prices

I consequently expect the income balance to emerge as an important drag on the US current account deficit. If my forecast on the income balance is close to correct, it implies a rise in the current account deficit even if the trade deficit stabilizes in nominal terms and starts to fall as a percent of US GDP.
größer/bigger headline

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