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Politics : Formerly About Applied Materials

AMAT 267.16

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3:59 PM EST

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To: Sun Tzu who wrote (69905)	4/23/2003 10:01:25 AM
From: chomolungma	Read Replies (1) of 70976

What you are basically saying is that we can devalue our way out of our economic problems. No, absolutely no. Our "economic problem," if you can call it that was that we had an overvalued currency. This went hand in hand with the overt speculation of the late 90's, early 2000's that pushed U.S assets to unsustainable levels. The dollar too was pushed too high. The result of this overvalued dollar was a trade deficit that was higher than it should have been as U.S. consumers purchased foreign-made goods and U.S. producers lost market share selling abroad. What we have now is a normal correction of an earlier excess. Is that bad? Of course not. The dollar has declined about 16% from its highs and will likely decline another 15% over the coming years. We are not trying to "devalue our way out of our economic problems." The market is just putting the dollar back where it should be. Those who are trying to fashion a crisis out of this movement are over-reacting. These are just ordinary, run-of-the-mill currency movements and as I have said before will result in a boost to the U.S. economy as consumption patterns are shifted. Again, the decline in the dollar is a good thing! Don't let fear mongers convince you that this will breed some investment crisis as foreigners pull their money out of this country. The investment climate in the U.S. will get nothing but better as the dollar's adjustment boosts earnings of U.S. companies. As I seem to have said a hundred times in the last year, 25% of S & P earnings come from abroad. Just you watch what happens to profit margins over the next 3+ years.

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