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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: GraceZ who wrote (222994)2/20/2003 6:58:36 PM
From: yard_man  Read Replies (2) of 436258
 
>>Is it of any more consequence then it's seemingly endless rising last year? <<

The USD is the reserve currency of the world, Grace.

Foreigners are no longer making a killing on their USD holdings, having had both price appreciation and the appreciation from holding USD assets -- instead they get a double whammy -- falling assets in USD and then a loss in currency translation.

A fall in the dollar can only be a preview to the fall in value of paper as a whole -- especially debt paper (and consequently everything supported by debt) and debt is the engine of the supposed growth in economic activity. To say it doesn't matter is silly. It means nothing less than worldwide economic slowdown.

"I'm still waiting for the trade deficit to be a problem"???!!

Is that a joke??

The trade deficit is already a problem -- years of sustained trade deficits have left us in a terrible position. Very vulnerable as the slump goes world-wide -- any reduction in our willingness to buy foreign goods, increasing our debt, and there is a concomitant reduction in foreign investment flows and it's going to happen. This increases borrowing costs and there is a non-linear reinforcement -- slowdown begets more slowdown. Would not be true if we hadn't been running huge trade deficits for years.

Japan is in a much better situation, if they would can some of the government expenditures and printing.
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