SNL China Cold Open : evergreen image of the USA debt


Saturdays Night Live ran a repeat yesterday of one of their most successful skits this year. The reminder of the joint press-conference of President Obama and the China’s Dear Leader comes at the right time.
China just reduced its holdings of US Treasury debt. Is it a political move or a sound investing strategy? I am afraid it is the second.

While President Obama continues to campaign on his Health Care reform, nobody is buying its miracle effect on the deficit anymore. The Congressional Budget Office finally revealed the whole picture and the grim true came to live: ObamaCare will add to the deficit.

Surprised? No! Even the SNL comedians knew you cannot cover more people for free. That money will come from our kids and grand kids repaying the debt to China.

The financial reform that just passed the US Congress gives even more authority to the Federal Reserve which is always tempted to just print the money.

No matter how much we kiss China’s behind eventually they will realize they are not getting quality services for their money. The raise in the GDP fueled with spending borrowed money make the US look weak – clunker weak. China and the rest of our creditors want no more kisses – they want jobs.

If the US economy readily starts to produce jobs – investors will fall in love with it again.

ObamaCare and the Financial Reform pile about 5 000 pages of new regulations in total. Unfortunately the only jobs they create for sure are the federal government bureaucrat jobs in the hundreds of new agencies, bureaus, commissions and boards. These are jobs that the private sector somehow has to pay for. Not a very stimulating thought!

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