George Galloway interviews Cenk Uygur on US debt ceiling crisis

From BBC News on the debt ceiling:

In 1995-96 the delay in raising the debt ceiling led to a technical default that caused risk premiums in the US Treasury (UST) bond yields to spike by between 10-50 basis points, but it was mainly transitory.

Assuming this time round, events play out in a similar fashion to that in 1995, there should be a knee-jerk reaction to shift out of UST.

The latest Treasury International Capital System (TIC) data shows that China actually continued to boost its UST holdings to $1.16tn (£717bn) in May, which is equivalent to about 26% of total foreign UST holdings and 36% of China's foreign reserves.

For Asia, theoretically their foreign exchange reserves may take a mark-to-market hit should there be a downgrade in the US rating and/or a spike in Treasury yields (ie bond prices lower), but the impact could be temporary and fade when the US debt ceiling is eventually raised.

So unless there is longer-term impact to the US's AAA sovereign credit rating (eg, their rating is cut despite the debt ceiling being raised, or financial markets go into a tailspin for whatever reason), the perspective on sovereign reserves typically tend to take a more medium-term view of such market gyrations.

In general, the Bank of International Settlements (BIS) data suggests that there has been a global diversification out of dollar-denominated assets, albeit this is a very gradual and multi-year process.

The euro's share of global reserves picked up in the first quarter of 2011, with the pace of accumulation also having quickened, compared to a further decline for the US dollar.

However, it is interesting to note that share of the euro and US dollar in the emerging market space has been softening.

There is also a continued growing prominence of reserves held in "other" currencies, albeit from a low base.

We expect these medium-term trends to be sustained.

Despite all these developments, the million-dollar questions are (a) which other global reserve currency substitute is there to the US dollar and (b) which bond market is as liquid and deep as the UST market?

Given the ongoing European peripheral debt crisis, the euro and euro region bonds both look vulnerable to event risks like a sovereign default or a disorderly debt restructuring at this juncture.

The emerging-market bonds markets are also less liquid and deep, which implies that alternative markets for portfolio diversification at a sovereign level are somewhat limited at this juncture.


George Galloway speaks to outspoken liberal US commentator Cenk Uygur of The Young Turks on the US debt ceiling crisis. During the conversation, Cenk gave a really scathing critque on President Obama by suggesting that he is not a progressive because he is taking policies that are to the right of some Republicans like making cuts to Social Security.


Originally broadcasted on 22nd July 2011.

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[smallrossy]

wooahh cenk and george galloway

[PRIVATEAYEIEYE]

The political right in America loves to go on and on about how "The Government must do as every family does, balance the budget".

Yet back in the glory days of Bush, when couples new to the workforce were getting married with Roman splendor, having babies, buying two cars, buying houses WAY above their station, decking them out with the full kit of furniture and electronics, individual debt grew bigger than income in the US.

And it was a non-story. Page 8 at best.

Not one peep from the GOP.

[smileykermit]

There's little to no difference on the Reps and the Dems when it comes to the military, fiscal schemes and capacity to envision the future. The credit rating is crucial to the health of the dollar and the fact that both parties fumbled this makes me think that they actually want the dollar to fail. The only reason they would want this would be to serve the New World Order that will be run by corporate interests... very soon Cenk and Alex Jones will share similar conclusions.

[jjcale1111]

@craigsmith4 You seem confused about Dr Paul:

1. He is not homophobe... he is a libertarian i.e. live and let live.

2. He is not a xenophobe... he believes in the original US position of "avoiding entagling alliances" and thus wants to end the US' role as de facto world policeman.

3. He does not want "tax cuts". He wants to return to limited government, including scrapping the Fed and the IRS.

4.Most of his supporters are college educated. We are not morons... and neither is DOCTOR Paul

[JoeDull]

Great interview

[craigsmith4]

@jjcale1111

HAHAHAHAHA Ron Paul

Ron Paul is a moron. He's a homphobic xenophobic TAX CUTS IN EVERY SITUATION right wing idiot.

Only an uneducated right wing fool thinks RON PAUL isn't a clown.

[elliejoe2011]

Cenk hasn't been taking money from GE for the past couple of years. I think you have him mistaken for someone else. For the past 6 months he had a gig on MSNBC but when he wouldn't play ball and wouldn't tone down his style to gain access to guests they cut him loose.

[jjcale1111]

Cenk would have my respect if he had not been taking GE's money for the past few years.

That's GE as in the industial company that is now a major financial firm and the owner of NBC and MSNBC.

That makes him as corrupt as the politicians he criticises.

And I have no time for Galloway... he was ready to be a bitch for any secular arab dictator for the right price.

... pity the UK does not have some one like Ron Paul who we know to be totally clean.

[TheTimoleon34]

and now, after this MSNBC debacle, cenk has even MORE street cred. poor game, but great commentators.