FRED
09-09-08, 11:54 AM
http://www.itulip.com/images/backtosleep.jpgWhat do you mean, US influence is waning?
by Joost de Jong
If popular opinion if to be believed, US dominion over world financial matters is fading slowly. And why shouldn’t it be. Mortgaged and indebted to the hilt, wide-spread evidence of almost criminally poor financial governance by the banks and the federal reserve alike, not to mention a president slightly less popular abroad than the black plague, one would think US financial affairs would no longer matter quite as much to the world economy as a whole.
Imagine my surprise then, when upon entering my local bank here in the country-side of Spain the branch director jumps out of her office in celebratory mood to announced the news of the Freddie Mac and Fannie Mae take over (read: nationalization) in the US. "Now we can get back to business!" she exclaimed.
I wondered what difference that was going to make to financial institutions in Europe. And this right after the European Central Bank had announced last week it’s tightening of capital requirements for lenders. These changes will have far more impact on her ability to business.
However, as I broadened my poll among my contacts here, it became clear that nobody really had any idea or even cared what the EU central bank authorities were doing. never mind how much more immediate their influence is to my friends' businesses. Instead, the US government’s move was headline news, as if an Alan Greenspan tooth-fairy with paste-on wings had twirled by telling us all is going to be just fine from Bali to London. Sorry, Ben Bernanke, nobody here knows who you are yet.
So, perhaps we owe these banks so much money that we have become too important to them to fail. It may very well be that with our every economic lurch and mis-step we send chills into hearts of central bankers around the globe as their eyes widen in fear at the prospect their carefully hoarded mountains of US debt evaporate into worthlessness.
Don’t under-estimate the US’s financial power and influence. When it really comes down to it, and the chips are down, the world still turns its head to the sounds emitted by the US Federal Reserve, looking for guidance and leadership, not to Brussels, London, Tokyo, Dubai, or Beijing. For most of the world it is still good ol’ USA that matters.
iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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Copyright © iTulip, Inc. 1998 - 2007 All Rights Reserved
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/GeneralDisclaimer.htm)
by Joost de Jong
If popular opinion if to be believed, US dominion over world financial matters is fading slowly. And why shouldn’t it be. Mortgaged and indebted to the hilt, wide-spread evidence of almost criminally poor financial governance by the banks and the federal reserve alike, not to mention a president slightly less popular abroad than the black plague, one would think US financial affairs would no longer matter quite as much to the world economy as a whole.
Imagine my surprise then, when upon entering my local bank here in the country-side of Spain the branch director jumps out of her office in celebratory mood to announced the news of the Freddie Mac and Fannie Mae take over (read: nationalization) in the US. "Now we can get back to business!" she exclaimed.
I wondered what difference that was going to make to financial institutions in Europe. And this right after the European Central Bank had announced last week it’s tightening of capital requirements for lenders. These changes will have far more impact on her ability to business.
However, as I broadened my poll among my contacts here, it became clear that nobody really had any idea or even cared what the EU central bank authorities were doing. never mind how much more immediate their influence is to my friends' businesses. Instead, the US government’s move was headline news, as if an Alan Greenspan tooth-fairy with paste-on wings had twirled by telling us all is going to be just fine from Bali to London. Sorry, Ben Bernanke, nobody here knows who you are yet.
So, perhaps we owe these banks so much money that we have become too important to them to fail. It may very well be that with our every economic lurch and mis-step we send chills into hearts of central bankers around the globe as their eyes widen in fear at the prospect their carefully hoarded mountains of US debt evaporate into worthlessness.
Don’t under-estimate the US’s financial power and influence. When it really comes down to it, and the chips are down, the world still turns its head to the sounds emitted by the US Federal Reserve, looking for guidance and leadership, not to Brussels, London, Tokyo, Dubai, or Beijing. For most of the world it is still good ol’ USA that matters.
iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
__________________________________________________
To receive the iTulip Newsletter and iTulip Alerts, Join our FREE Email Mailing List (http://ui.constantcontact.com/d.jsp?m=1101238839116&p=oi)
Copyright © iTulip, Inc. 1998 - 2007 All Rights Reserved
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/GeneralDisclaimer.htm)