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Friday, 20 March 2009

What the Pros Say: US Is Now 'Bankrupt'

Global stocks traded higher, as did the dollar against the euro, Thursday after the Federal Reserve's surprise announcement it would buy $300 billion in US Treasurys in order to help the ailing economy.

But experts tell CNBC they have concerns over the Fed's latest move and that the current national balance sheet is a disaster.

US is Already 'Bankrupt'

Technically, the U.S. is already "bankrupt" because it has a debt that is almost four times the size of its economy, says Puru Saxena, CEO of Puru Saxena Wealth Management. He tells CNBC that the U.S. is at risk of hyperinflation.


Fed to Buy Treasurys is Not a Good Sign

Stephen Roach, chairman for Asia at Morgan Stanley does not view the Fed's plan to buy $300 billion worth of long-dated government debt as a constructive sign for prospects going forward.

Fed's Move Unlikely to Help Economy

The Fed pumping money into Treasurys won't help, says Martin Weiss, president of Weiss Research. He also discusses what can be done to turn the US economy around.

The US Stuck in Zero-Rate Mode?

America is arrogant to deny their similarity to Japan's economy, says Stephen Roach, chairman for Asia at Morgan Stanley. He tells CNBC that the US economy is in a "zero-interest rate" mode, like Japan.

Quantitative Easing & the Fed's Balance Sheet

Thomas Lam, vice president and senior treasury economist at UOB, says the Fed's latest moves such as to buy long-dated Treasurys will stretch its balance sheet and pump more liquidity into economy.

Tackling US Economy

Housing problems need to be tackled before the U.S. economy can pick up, according to Adam Carr, senior economist at ICAP.

Fed's Actions Bode Well for Asia

The Fed's bold moves to support the U.S. economy is good news for Asia, believes Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide.

Redirecting China's Foreign Investments

China is unlikely to unload their dollar-denominated reserve as such a move will only hurt themselves at this point, says Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide. He tells CNBC how its foreign investment strategy may change.


China Needs Internal Demand

China needs to change its structure to an internal demand driven economy, says Stephen Roach, chairman for Asia at Morgan Stanley. He tells CNBC that China is hugely dependent on external demand as a major source of economic growth.

ECB in "Splendid Isolation"

The ECB should be out there pumping money into the system, says Paul Donovan, MD & head of global economics at UBS. He tells CNBC that the central bank is sitting in "splendid isolation".

More Pain Ahead for Europe

There is no cause for optimism in the medium term, despite the better-than-expected data from the ZEW survey, says Par Magnusson, senior analyst at Danske Bank.

Deflation Will Hit Mid-Year

Deflation is a near-term risk that may hit global economies in the middle of the year, warns Paul Donovan, MD & head of global economics at UBS.

Preventing Runaway Inflation

When liquidity floodgates open, global central banks will have to sterilize very aggressively and in time to prevent runaway inflation. Yuwa Hedrick-Wong, economic advisor at MasterCard Worldwide tells CNBC how this can be resolved quickly.

The Fed's Recent Moves are Right

"This decision to purchase long-term assets, mortgages, long-term treasury securities, is the right thing to do. The Fed would clearly rather err on the side of inflation rather then depression," said Dennis Gartman from the Gartman Letter. He also touches on the housing market in the US as well as the TALF.

© 2009 CNBC.com

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