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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: PAUL ROBERTSON who wrote (9550)	7/16/2000 7:04:17 AM
From: sea_urchin	Respond to of 81403

Paul : I, for one, would be very happy if your forecast is correct. I agree that the Euro is ready for some recovery.

To: PAUL ROBERTSON who wrote (9550)	7/23/2000 1:02:54 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 81403

Taxes, everywhere but the US, have no where to go but down Paul, I think you are making some very erroneous assumptions in your analysis. Countries that are running current budgetary surpluses have FAR MORE lattitude to reduce overall tax rates than do those nations who have increading deficits which must be financed through increasing tax revenue. The Japanese are approaching the point where they will surpass the US and become the world's largest debtor nation. And since they can't seem to spur significant economic growth that might offset that debt, they face strong pressures to maintain or increase tax collections. Either that or devalue their currency in order to monetize their debt. Now Europe is an interesting case and we are seeing Germany decreasing taxes for both individuals and corporations (read Friday's WSJ for an article focusing on this point), there is still significant doubt that the rest of Europe can sustain growth without inflationary fears from a weak Euro and dependency on exports to the US (which is slowing, causing decreasing demand for their products). The US dollar is TOO STRONG at the moment and that is impacting the earnings of US exporters and exacerbating the trade deficit. However, the other major economies would like to see the dollar stay right about in this range (although this damages them in regard to imported oil, denominated in US dollars) as it provides them the cushion to export their way to economic recovery. The bottom line is that every since the Asian Contagion of 1997, the world has essentially relied upon the US to continue to carry the greatest burden. And you should never discount the trillions of dollars locked up in Japanese 10 year bonds that are coming due over the next several years. Those people will have little incentive to swap their 5-7% rates they receives 10 years ago, for new JGBs that only yield 1/4 percent. They will be more inclined to buy US and European bonds that yield a far higher interest rate. Just some things to keep in mind when analyzing the macro-economic picture. Regards, Ron