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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: UncleBigs who wrote (49022)1/7/2006 7:31:17 PM
From: GST  Read Replies (1) of 110194
 
<Decreased financing needs. If our economy slows, the trade deficit will narrow and our need to finance the current account will drop.>

If the US economy slows, then our already stupendous government deficit will leave planet earth and reach into outer space. As for the trade component, don't automatically expect Americans to reduce purchases of cheap imports (or to park their cars). Domestic production is likely to take a far higher hit than imports. But even if imports drop, the balance of trade requires foreign sales -- don't expect foreign sales of our financial paper or goods if we slow down. Much of we we export is capital goods and demand for them will dry up in a global slowdown. It is a suckers bet to think that our dependence on foreign capital will go done as our economy slows. And our dependence on foreign debt will soon be the deciding factor on inflation.
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