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To: Bobby Yellin who wrote (45864)	12/10/1999 3:05:00 PM
From: Alex	Read Replies (2) \| Respond to of 116762

EX-FED'S BLINDER: SEES 'MUCH LOWER' DLR AHEAD FROM TRADE DEFICIT By John Shaw WASHINGTON (MktNews) - Former Federal Reserve Vice Chairman Alan Blinder said Friday that so far the burgeoning U.S. trade deficit has had "benign" consequences, but added that a sharp adjustment to the dollar to help reduce that deficit is looming. In testimony before a special panel examining U.S. trade policy, Blinder said that he expects that "a lower dollar - make that a much lower dollar - will ultimately play a major role in whittling our trade deficit down to a manageable size." Blinder said that the differential between 10-year government bond rates in the U.S. and Japan is implicitly forecasting that the dollar will be worth only about 70 yen a decade from now. "Getting the dollar down will not require what some people call a weak dollar policy. Rather, the markets will do the job for us. The key question is whether the necessary exchange rate adjustments will come smoothly or abruptly. My guess is the former - which is the way it happened in the 1980s," he said. Blinder noted that while the effects of the large U.S. trade deficit have been very modest so far, he said there are "incipient worries" that should be considered. The former Fed vice chairman said his greatest fear is that the trade deficit will "reawaken protectionist sentiment in the United States. You can see stirrings of this now, though so far they have been muted." He said his other concern is that the trade deficit, "may be setting the dollar up for a big fall." Market News International Washington Bureau: (202) 371-2121 10:13 EST 12/10 ¸ 1999 Market News International, Inc. -------------------------------------------------------------------------------- economeister.com