Stockman Scott's Political Debate Porch Message Board

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Politics : Stockman Scott's Political Debate Porch

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To: Kip518 who wrote (67706)	12/2/2004 12:19:44 PM
From: stockman_scott	Read Replies (2) of 89467

Pulling the plug on US debt iht.com <<...To Andy Xie, chief Asia economist at Morgan Stanley, allowing the dollar to slide is "simply another way to get foreigners to subsidize U.S. spending" so that Americans can continue living far beyond their means. . "Asia can fight back," Xie says. "The U.S. uses its superpower status and the advantage of the dollar as the currency for trade pricing and central bank reserves to get foreigners to fund its outsized spending habit. Without a market signal, this U.S. shopping addiction won't stop." . Xie thinks that even if Asian central banks sell Treasuries now and keep the dollars only in cash form, U.S. bond yields could rise 1.5 percentage points. The 30-year bond currently yields 4.83 percent. . "That higher bond yield would stop the merry-go-round among the Federal Reserve, the hedge funds, the Asian central banks and the U.S. consumer," Xie says. "With higher bond yields bringing down U.S. consumption, the global imbalance would heal."...>>

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