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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Archie Meeties who wrote (90217)1/7/2008 12:46:36 PM
From: KyrosL  Read Replies (2) of 110194
 
It's not public debt as % of GDP that influences the exchange rate but rather balance of payment deficit as % of GDP. We have been running record amounts of that for many years -- 5-6% of GDP. Eurozone has as much public debt as the US and right now is actually running bigger budget deficits, but their trade balance has been consistently near zero or slightly positive -- for example, Germany usually runs huge trade surpluses. The reason for this difference is the high savings rate in Europe versus zero to negative savings rates in the US in the last decade.
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