Foreign investors veto Fed rescue

"Yes, the Fed caused this mess by setting

the price of credit too low for too long,

feeding the cancer of debt dependency.

But we are in the eye of the storm now.

This is not a time for priggery."

By Ambrose Evans-Pritchard, International Business Editor
The Telegraph
Last Updated: 12:11am GMT 19/03/2008

As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.

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Dollar plunges as Fed steps up moves
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Desperate measures: Bernanke and the Federal Reserve need to keep on top of the crisis and continue to intervene if needed
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."
The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
It is not my view. I believe the forces of debt deflation now engulfing America - and soon half the world - are so powerful that nobody will be worrying about inflation a year hence.
Yes, the Fed caused this mess by setting the price of credit too low for too long, feeding the cancer of debt dependency. But we are in the eye of the storm now. This is not a time for priggery .... Read the Entire Article