Greenspan Warns on Asian Bank Buying

[UpInArms]

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=4482237

NEW YORK (Reuters) - Federal Reserve Chairman Alan Greenspan on Tuesday issued his strongest criticism yet of Asian central bank purchases of U.S. assets, saying it could raise problems for the economies of China and Japan.

He said "extraordinary" Asian central bank buying of dollar assets had totaled almost $240 billion since the start of 2002, describing the size of Japan's purchases as "awesome."

<snip>

Japanese monetary authorities bought almost $100 billion in January and February in their efforts to prevent the yen from rising rapidly and damaging the nation's export-led recovery.

<snip>

The Fed chief said it seemed likely that Tokyo's rate of accumulation of dollar assets "will have to slow at some point and eventually cease" once the current situation of declining prices, or deflation, is past.

"He told the market something a little bit new, that Japan's getting closer to the point where intervention would not fit with the monetary policy goals of the country," said Alan Ruskin, research director at 4Cast Ltd.

...more...

Well, well, well. If Japan and China cease to buy our treasury notes, how will the greedy GOPers finance their debt?

[mac2]

1. Greenspan...you are a jerk!!

You allowed us to go into debt. You borrow from Chinese banks (many our own)to pay our debt and then warn us of a Asian takeover? We are cheaper with a weak dollar.

Why aren't you recommending we pay off our debt and get rid of the recent tax cuts to the rich?

Greenspans economic policy defines logic. Is he trying to impress us that he cares about us...or just getting us ready for it?

Has he warned Congress to stop the tax cuts before we go into bankruptsy? NO!!

[Joanne98]

6. Greenspan needs to go

I wonder if the next president has the guts to boot him. Dean called him to political. Someone needs to call him a crook.

[UpInArms]

9. Welcome to DU Joanne98!

:hi:

Okay - if no one else is game, I'll do it:

Greenspan is a crook!

:evilgrin:

[Turbineguy]

2. Since when has Greenspan

become Dubya's buddy? Not Likely.

[mac2]

4. He follows Bush's economic policies..yes he is a Dubya buddy.

[JNelson6563]

3. heh heh the new WMD

If they hold enough of our treasure they could bring us to our knees pretty fast. Team Bush is smart to keep this hidden from view. Keep pumping up stocks, the people won't notice.

Julie

[mac2]

5. The stock market is a big lie.

Glad someone else noticed. I keep worrying about our retirement but my spouce won't listen while our stocks go up..up..up. Keep a sharp eye for a fall after the "selection".

[orwell]

7. Debt Bomb

The debt will be financed. Reduced demand will force rates up.

The only time the debt would not be bought is if there is a perception of default. Other than that, it's just a matter of how much do we have to offer to attract the investment.

The problem with rates going up in this manner is that it takes "the economy" out of the Fed's hands (where it should be anyway). The amount of leverage in the system is large enough now that a large rate hike would be explosive on cost structures and final demand. It would be akin to the oil shocks of the early 70's. At best, stagflation would result. At worst, a worldwide economic contraction.

O

[TrogL]

8. Took him long enough

Over in the economic forum we've been complaining about this for months. Near as I understand it the Japanese can't keep it up much longer because they're running out of resources.

[La_Serpiente]

10. Aren't the Japanese the only ones

keeping the Dollar from sinking?

[htuttle]

11. Greenspan wants the dollar to sink

It's part of their Strong Dollar Policy™.