[jively]

[ QUOTE ]
The USD will decline further. There is an attrocious imbalance of trade in America and it cannot go on forever. Furthermore, there is a very, very high probability that the US will default on a portion of it's debt in the near future [...]
The US government is selling treasuries today with interest it can't afford to pay back, and that problem is only going to get worse in the future. [...]
How do you react to a 90% chance that the US will default on its debt?

[/ QUOTE ]
Whoa, this is a real doomsday prediction. There have always been "perma-bears" that think things like this, and I suppose there always will be. Y2K had an 80% chance of causing a recession, according to some. Some people moved all their money to gold and moved out in the woods with years supply of food and ammunition!

The bond market is pretty efficient. The bond traders really do analyze a company and sell the bonds that have a high probability of defaulting. GM bonds are rated at BB or somewhere around there, and are not investment grade anymore... GM has some probability of defaulting on some of their bonds. But US treasury bonds still trade at AAA. If there was a 90% chance of default, they would probably be rated in the C's.

Do you know there is a huge trade deficit between New Jersey and Texas? (I actually forget which way though! Doesn't really matter.) The consumers in New Jersey are importing an enormous amount of goods from Texas. It really can't continue!

If the goods are cheaper to make and import from China, that's best for the world economy. It's best for us because we get lower prices. Capitalism works.

The US economy is really, really strong and resilient. It is possible it won't be the strongest economy in the world in 50 years, but bankruptcy is not probable.

-Tom