"biggest single item among recorded U.S. capital inflows is ,in fact, borrowing by corporations and federally sponsored agency"
William, since April, it has been clear what is actually keeping the market afloat--such as it is. Like clock work, whenever US stocks fall, the euro plunges. The correlation has been so obvious, and so strong for so long that I'm surprised nobody points it out. Today, when the dow plummeted 400 points in the first half hour, it subsequently spectacularly recovered at the same time the euro plummeted in perfect, minute-by-minute synchronicity. Were "foreigners" just itching to grab those crashing US bargains?
My experience with foreigners is that they understand better than we do the US is a bubble economy. If you understand multi-national corps, and what the GSE's do, then you understand that capital inflows don't really have to be "foreign." Which raises a real predicament--when you finance a bubble by borrowing someone else's currency, you no longer have the option of printing your way out of it. The exchange rate has to be maintained. No one seems to grasp this, or what it means.
bloomberg.com |
