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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (73824)	1/16/2000 11:42:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

earlie, you forgot to mention massive trade deficit as one of the us' main economic strengths. ;-)

To: Earlie who wrote (73824)	1/18/2000 11:47:00 PM
From: BGR	Read Replies (4) \| Respond to of 132070

Ealie, That was a long post, 1/4 hyperbole and self promotion, 3/4 material. I have decided to concentrate on the material part. I hope that you wouldn't mind. Of course, since rates - both long and short term - have been steadily climbing over the past several months, it doesn't take a genius to figure out that there has been net selling in treasuries. To translate that to an awakening on part of global investors is a folly, however. As the great Sherlok Holmes once said (Do you read Arthur Conan Doyle? If not, I strongly recommend that English genius.) - and as has been codified under the name of Occam's Razor - often the simplest solution is the right one. I elucidate in the next paragraph. Let us assume that foreigners, indeed, have been selling bonds (as you claim, as they are not sure that they will ever be repaid). At the same time, the US trade deficit has been growing (fact 1) and the dollar is more or less steady against a busket of foreign currencies (fact 2). This, together, may mean one and only one thing. That foreigners (and perhaps domestic investors, too) have been selling bonds to buy US equities and property. Why would anyone do such a thing, of course, is evident. Most humans (and institutional investors in particular) are trend followers, and bonds have been dipping lately, while stocks have been soaring. IOW, it has no relation to the credit worthiness of the USA over the long term. I elucidate further in the next paragraph. Yesterday the headline in the New York Times was about the budget surplus. It seems possible (from that article) that the US is may decide to pay off its national debt over the next 15 years. You think that those investors who forwarded the loans to the USA during the years of massive budget deficits are suddenly concerned about US solvency in the days of massive budget surplus!? Well, think again, dude. Hence, IMHO, the buck is safe. The BOJ is inflating, and the less said about the Euro the better, don't you agree? As for the "stock market bubble, frenzied money supply expansion, manic borrowing, and bogus economic numbers" - since these are subjective impressions, they do not deserve any criticism, IMHO. Regards, -BGR.