mish,
Wow, wow, wow. There is some meat in that one. What we need is a special pair of glasses (like Joe Smith's) to really get the message out of this.
Red flags on housing, the post WWII global economic paradigm (is it changing and will it be smooth or abrupt?), consumer debt, potential for "abrupt" corrections in key market balances (imbalaces actually!).
I wish I didn't have to rush out to a meeting, because I think it would be fun to try to peel this onion.
This statement is not clear to me.
"At some point, however, international investors, private and official, faced with a concentration of dollar assets in their portfolios, will seek diversification, irrespective of the competitive returns on dollar assets. That shift, over time, would likely induce contractions in both the U.S. current account deficit and the corresponding current account surpluses of other nations."
I understand the first part regarding diversification (hmmm, a hint that US assets may not be yielding historic returns in the future?), but I do not understand how this "induces" a contraction in the US account deficit. Can someone please explain this to me? What am I missing here?
Thx
TH |
