Wednesday, October 17, 2007

Will US protectionism pull the trigger?


An article by D R Schoon in GoldSeek (26 September) alerts us to a bill heading for a vote in the US Congress this autumn. It seeks to impose a 20% tariff on Chinese imports.

... China will retaliate; and, dumping $1.33 trillion of US Treasuries on the open market will be an all too easy and accessible option. It would destroy the US dollar and deal the US economy a body blow from which it would take years to recover...

Now unless US politicians are really abysmally stupid, they must have a backup plan to stop a torrent of dollars pouring back into the States - exchange controls? Repudiating the debt? If Russia's default forced the bailout of LTCM to prevent systemic crisis, what would a giant American default do?

We must hope for cool heads all round. US multinationals are already urging calm.

5 comments:

dearieme said...

You can read about an earlier American default here:-
http://www.grantspub.com/articles/inflation/

SACKERSON said...

Thanks, DM, I have saved it to favourites and will read at leisure. Hope all's well with you.

AntiCitizenOne said...

Barclays just got a 23A exemption!

SACKERSON said...

Hi, ACO:

1. Are you referring to section 238 (1) of the Financial Services and Markets Act 2000 (“FSMA”), relating to promotions to self-certified sophisticated investors and to associations of high-net worth or sophisticated investors, as amended in 2005 (http://www.opsi.gov.uk/si/em2005/uksiem_20051532_en.pdf)?

2. What do you think is the significance of this development?

AntiCitizenOne said...

Nope

http://www.federalreserve.gov/boarddocs/legalint/FederalReserveAct/2007/20071011/20071011.pdf