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Strategies & Market Trends : News Links and Chart Links

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Nov 11 4:00 PM EST

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To: Les H who wrote (5372)	2/3/2003 4:32:49 AM
From: Chris McConnel	Read Replies (1) of 29595

This is a very long article... but it's really good. lrb.co.uk --------------------------------------------------------- Second, in 2002, US trade and current-account deficits broke all records. Until recently, overseas investors have been more than willing to fund these deficits, making huge direct investments in the US, and buying up corporate equities and bonds. But as the American economy and stock market have continued to disappoint, the rest of the world has sharply reduced its buying, and its equity purchases fell by 83 per cent in 2002 compared to 2000. As a result of this disenchantment, pressure on the currency has mounted and the dollar has fallen by 16 per cent against the euro in the space of a year. If these trends continue, the Federal Reserve could soon be faced with an excruciating choice: either let the dollar fall and risk a wholesale liquidation of US properties by foreign investors - which might not only wreak havoc in the asset markets but also set off a real run on the dollar - or raise interest rates and risk pushing the economy back into deep recession.

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