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To: marc chatman who wrote (50945)	9/11/1999 12:39:00 PM
From: gpphantom	Read Replies (1) \| Respond to of 95453

Those OPEC guys will just have to increase the price of oil a little higher to make up for a weaker dollar <VBG>

To: marc chatman who wrote (50945)	9/12/1999 1:35:00 PM
From: dfloydr	Read Replies (1) \| Respond to of 95453

marc, A couple of thoughts: First, I do not see imports and exports as being all that optional. In most cases you are talking necessities, such as our need to import oil. We used to be in business in South Africa. Of course we were in the import and export business. Contrary to most academic views of foreign trade, most of what we imported we had to import because it was not available locally. Most of what we exported was stuff that only South Africa had to offer. Exchange rates would change. Very little happened in the short term to the flow of orders. Yes, if some foreign good got really expensive, over time a plant would be built in South Africa to make that good. That took years. In sum, I do not see foreign trade as being very flexible in the short run. Take color TV sets. Absolutely none are made in the States. Can you imagine this country going cold turkey on color TV sets? Walk in to a Wal-mart or K-Mart and it will take you a while to find anything that is not made in China or Taiwan or Malaysia. On the export side: we export a lot of farm goods and high tech stuff. Most of this goes to users who have few other choices: only Caterpillar makes those great tractors and where else can you buy enough wheat to feed a whole nation. Second: given this view, look at our balance of trade. We have run an ever growing trade deficit for decades. That is not likely to change much in the short term in my view as stated above. What will change is the price that applies to the inbound and outbound flows. The price of outgoing goods will gradually move up as US suppliers realize that their goods have become cheaper in world terms. The price of incoming goods will move up somewhat more quickly with the rate of exchange, limited only by that fact that some imports will continue to come in under long term contracts. Since we import so much more than we export, the net will be for more dollars going out than before. This will not help interest rates, prices, fund raising and budgets in this country. I realize that this view flies in the face of my college Econ 1 textbook (Samuelson) and all the blather that I read in my years on Wall Street from the academics. It stands up pretty well to what I have seen in the real world over the years. Think about it: we have had a number of administrations now that have talked and fanagled the dollar's value downward for perhaps thirty years in the hopes of changing the balance of trade. I doubt you will find one quarter in the last 120 that shows much improvement. With a score of 120 to 0 .....