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Pastimes : A Jackass, his PAL(indrome), and GOLD

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To: yard_man who wrote (282)1/20/2003 3:14:12 PM
From: Jim Willie CB  Read Replies (1) of 1210
 
why will foreign spending fall faster than US spending?

two major reasons
1. their economies are far more leveraged to exporting to US markets
thus their ripple effects will hurt badly
as we import less, their businesses will simply hit a wall

2. their bank systems are far more leveraged to dollar declines in USTBond holdings
thus their ripple effects will hurt badly
as we import less, their banks will suffer on depository ratios

have you noticed that Europe's economy is weaker than US?
Asian economies are humming along, but when US import consumption falters (and it will), those Asian economies will be hit much harder than ours

how can the US be the engine of world economic growth,
and not see the exporting nations hurt worse when we slow down ???

your implicit assumption is backwards

then there is the pricing mechanisms within the exporting nations
they will have to absorb a shrinking profit margin
or else raise prices inside the US for their goods

as we import less, we will see the big effect of foreigners purchasing MUCH MUCH MUCH less of our stuff !!!
since their whole world is US export centered, sadly
they have a bad plan, with banks that will hurt bigtime

/ jim
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