I don't really think the Ukraine will have a major impact in the grand scheme of things. Russia owns something like 1% of treasuries and it will hurt them more than the US if they were to sell. What they'll likely do is move the treasuries offshore to prevent the US from freezing their assets.
As for tapering, it might happen but if/when the market reacts badly enough, the Fed will give in as they always have. The whole economy is addicted to cheap money, it's no longer a stimulus, it's an entitlement. When we do reach that edge, it will be a bad one, but we're not there yet. This game can go on for quite a while yet.
As for tapering, it might happen but if/when the market reacts badly enough, the Fed will give in as they always have. The whole economy is addicted to cheap money, it's no longer a stimulus, it's an entitlement. When we do reach that edge, it will be a bad one, but we're not there yet. This game can go on for quite a while yet.
Ukraine is not the reason, but it might be a kickstart for the game to fall apart, the match lighting the fuse.
Why do you think selling will hurt Russia more than the US? And do you have a statistic of which country holds what percentage? Would be interesting to see.
I absolutely agree, the world is addicted to cheap money like a heroin addict, and withdrawal symptoms will be BAD. They will be forced to raise QE again at some point, but by then the addiction will be obvious and confidence will go down the drain.
Why would it hurt Russia more than the US? It's simple economics, if you dump treasuries (increase supply) while demand stays constant, price goes down. So Russia would lose money by dumping their treasures, which would have a nominal impact on the US because they are not major holders of treasuries. Their holdings are about 1%, you can do a google search if you want links.
Russia has more play in hurting Europe by shutting off the gas (as they've done in the past). Unfortunately for Russia, most of the EU has now prepared for this disruption since the last time by increasing reserves and once again, shutting off the gas will hurt Russia as well. Putin has already weighed all of this out, he knows the consequences and is obviously moving forward. Could this be the start of something major? Maybe. Like I said, wake me up when he invades a NATO country, all this is is a tiny peninsula in Ukraine (not even the whole country) that wants to be independent anyway and is majority Russian to begin with.
