Construction economic forecast

Economic recovery in 2009-10, but problems beyond.

06/02/2009


 


 

According to Reed

Construction Data reports from Jim Haughey , the treasury's AAA credit rating

was properly taken for granted until a few months ago. Indeed, the whole

structure of interest rates used Treasury debt as the risk free, base, interest

rate with other rates calculated as premiums or spreads over the Treasury rate.

The U.S. dollar was long used as the prime international reserve currency. U.S.

Treasury debt was the safe have for foreign investors willing to accept a low

rate of return in exchange for avoiding default risks in debts denominated in

other currencies.

 

Now the massive borrowing by

the Treasury in the last few months has put the traditional international role

of the U.S. dollar in question. We have worried about this happening for years.

But it never happened. Every crisis led foreign investors and governments to

bring money to the United States

for safekeeping. Other countries had to make painful spending cutbacks

periodically after spending binges, but the United States has been spared

because of its unique role in international finance and sufficient borrowing

restraint.

 

Read the full report.





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