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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who wrote (7180)	8/15/2001 12:53:18 PM
From: smolejv@gmx.net	Read Replies (1) of 74559

I spent some time together with „As the implosion begins“ – Strategic analysis (www.levy.org/docs/sreport/implos.html) The present macroeconomical situation in US can, according to this study, be best described by the following indicators · Low unemployment · Zero budget deficit · Large negative private balance · Large deficit in the current balance of payments In the paper several 5year target situations are discussed, for instance the Congressional Budget Office (CBO) , which assumes · Moderately (5%) higher level of unemployment · Increasing budget surplus · Sustained GDP growth of app 3% The paper indicates that the unmentioned side-effects of this budgetary scenario would be further deterioration of both private balance to –8% (!) and of the current balance of payments to -6% GDP[] in 2006 On the other side of the 5year scenarios there is a UK-1989-like script with · significantly (9%) higher level of unemployment · 3% deficit · 0% balance of payments · +2% private financial balance · GDP Growth of 1.13% Anything in between these two extremes of course is possible, and according to the study the worse the outcome, the more plausible it looks. Which variable or parameter, not necessarily mentioned so far, would accompany the shift between now and any of the then situations? My reading is as follows: a) changes in US policies (dollar, GATT import controls) to favour exports b) change of heart in the US budget policies to the deficits c) change of heart in the IOU-holders (aka repatriation of foreign investments) d) .... Of course when talking about all these parameters, variables and aggregate indicators, it's a question what's the dog and what's the tail. They for sure look connected to me. What's your reading on this material, Thread? Dj [] How much more credit can US handle?

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