I argued three months ago that China couldn’t possibly dump their treasuries, even as pundits and analysts in the financial channels kept scaring the bejesus out of everyone.

So I was very happy to hear Roger Altman last night say that:

CHARLIE ROSE: Pete Peterson … also talked about the fact that the Chinese hold so much of our debt. Is that going to change, and are they going to change it?

ROGER ALTMAN: A, they’re clearly concerned about it, about the
concentration risk that they have. B, their options for changing it are relatively few, and there’s no scenario in which they can change it quickly. There just isn’t.

CHARLIE ROSE: They’d have to take that money and find another place
to invest it as well, without destroying the American economy.

ROGER ALTMAN: It would be self-defeating to act quickly. Therefore,
any diversification which the Chinese pursue — and they will — will be
slow and gradual. And the risk that so many people talk about, I think
very loosely, you know, the Chinese may, quote, dump the dollar or flee the
dollar. That’s misguided, I think.

CHARLIE ROSE: Because it’s not in their interest.

ROGER ALTMAN: It’s not in their interest and it’s not possible to do
it. So, it’s not a good thing for over the long term, as President Obama
himself said, for China to be — for us to be the consumer and China to be
the lender and have it exponentially grow as it’s been. We have to stop
that. But China’s not going to make — take self-destructive action, and
dumping the dollar or quickly trying to exit the dollar would be very self-
destructive, and they’re way too smart for that.

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Billionaire Peter Peterson, one of the Blackstone guys (now retired) talks about his life, the economy and our unsustainable deficits with Charlie Rose.

But what struck me is how the interview sounds like a chapter out of Malcolm Gladwell’s book Outliers: The Story of Success.

First, Peterson points out the many unforeseen and unplanned events that lead him to his success, such as getting kicked out of MIT (so he ended up a businessman instead of an engineer).

Second, he confides his belief that his constant drive for achievement was just a subconscious  way to get his mother’s attention after she lost her daughter at age 1 and became very melancholic.

Indeed, he is walking proof of Gladwell’s point that success is usually due to external factors beyond our control.

A nation of savers?

April 28, 2009

Something Charlie Rose said while interviewing David Brooks got me thinking:

“Time” magazine said that Obama is betting his
presidency on our ability to change — our ability to change our behavior.
That he has some confidence in our ability to change. The big idea is, can
we change from consumption to savings?

It sounds plausible, and achievable, considering we’ve already adjusted our habits drastically during the downturn.

So why would this be a good thing?  Because it would…

  1. Support demand for Treasuries which lowers offered interest rates.
  2. Reduce the crowding-out effect of the expanded national debt on domestic private investment.
  3. Lessen the fiscal impact of prolonged deficits, as larger portions of interest are paid to domestic debt holders and reinvested in the U.S. economy.
  4. Dampen demand for Chinese products, which would cool their growth and reduce our trade imbalance, and delay the coming about of their middle-class as the principal economic force in the world.

Brooks on Obama

April 27, 2009

David Brooks’ appearance on Charlie Rose is the best assessment yet of Obama the man, his presidency, and where he’s taking us.

As much as I consider myself a Progressive, I find myself agreeing with Brooks and Andrew Sullivan often.  I don’t know what that means exactly, except that perhaps the old right-left molds don’t apply as they used to.

The future of Israel

January 14, 2009

Bob Simon has a sobering look at the future of Israel.  Some excerpts:

“… I think history has passed it [a two-state solution] by..”  because removal of the settlers is not politically and militarily viable.  So many of the soldiers are religious guys the army would break apart.

“.. might have been possible with Rabin, which is why he was killed.”

Within 20 years Palestinians will outnumber Jews.  What happens then?  Three options:

  1. Give them the vote (unthinkable)
  2. Ethnic cleansing
  3. Apartheid

Some say apartheid is already here.. for example settlers have their own highways that Palestinians are not allowed to use.

“The settlers went in there knowing that their objective was to prevent a Palestinian state”

“Gaza has become the largest prison in the world”