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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Larry S. who wrote (64633)6/26/2006 11:47:57 PM
From: basho  Read Replies (2) of 110194
 
Larry, I think you're absolutely right to question the word "attract". Using it in that context in effect reverses the cause and effect equation. It's a lazy shorthand in common usage which in my view generates far more confusion than clarity.

As I see it, the primary driver of the whole unhealthy cycle is "excess" US demand generated by a combination of debt fueled consumer spending far above historic norms and ongoing US fiscal deficits. The resulting external deficit must of course be funded by foreigners or it couldn't arise in the first place. In other words, if their risk perception of the US shifted enough to severely curtail their willingness to recycle those deficits, then they wouldn't be able to be generated in the first place. America would quite simply have to curtail its hunger for imports and/or generate more exports.
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