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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 219.87

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1:16 PM EST

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To: Sarmad Y. Hermiz who wrote (111465)	10/29/2000 11:38:22 PM
From: GST	Read Replies (1) of 164684

Sarmad: The reason we have not encountered serious economic damage even though we run a huge current account deficit is quite straight forward -- foreign investors want to buy our financial assets in ever larger amounts. The dollars floating around abroad are not relevant. The Europeans, Japanese and Arabs -- and lots of other people -- have decided each year to buy US stocks and bonds in ever larger quantities. It does not just get wished away. We owe foreigners trillions of dollars. We don't count it as a debt anyway -- it is just a running current account "deficit balance". The ugly scenario is one where our financial assets are deemed to be not sufficiently attractive to keep this investment game going. At that point, it is in the interests of all foreigners to sell US stocks, bonds and of course the US dollar. Once this process begins, it tends to feed on itself -- who wants to be the last to leave and end up with a small fraction of their investment? It is aggravated by currency issues. If you hold dollar denominated assets in a market moving downwards, you risk losing money on the investment and then losing even more money on currency exchange.

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