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To: Amy J who wrote (134077)	5/3/2001 10:22:36 AM
From: GVTucker	Read Replies (1) \| Respond to of 186894

Amy, RE: weaker dollar, weaker stock market? What is the total foreign capital input into US system? How does that number differ from the average? Any estimates on size of potential outflow of foreign capital? There are so many contrasting issues here that there are no hard and fast rules. Back at the beginning of the bull market, in the early-mid 80's, a weaker dollar was a net positive, as the multinationals like the drug firms and consumer non durables like Coca-Cola could get an extra bump out of earnings. More recently, the strong dollar has aided tremendously in keeping inflation low and thus allowing the Fed to keep interest rates lower than economic conditions would otherwise permit. In the current situation, I would imagine that a weaker dollar would translate into a weaker stock market, as the Fed wouldn't be able to lower rates as much as the market would like. As far as foreign capital and its deviation from normal, the US has long been a magnet for foreign capital; people in other countries rightly look at our economic and political stability as representing a good place to park capital. Since 1994 or so, this capital flow has increased. I don't have numbers off hand, sorry, so I'll need to stay qualitative. And as far as the euro is concerned, I see that as a net negative long term for the dollar rather than a net positive. If the euro proves to be a long lasting currency, then this will decrease the propensity of Europeans to store wealth in dollars. In addition, people in other countries may diversify dollar wealth into a combination of dollar wealth and euro in order not to be so dependent on the health of the US economy. Note that this is all heavily in the realm of opinion. And while my opinion isn't necessarily in the minority, there are a whole lot of people smarter than me who disagree.

To: Amy J who wrote (134077)	5/3/2001 10:26:07 AM
From: willcousa	Respond to of 186894

The relative value of the dollar always solves the problem Greenspan apparently was speaking to. It also solves the negative balance of payments. For the dollar to become less attractive our economy has to get weaker or others have to get stronger or both. I don't see where the foreign strength is going to come from in the next 6 months to a year.. If we weaken I expect they will weaken too since we seem to be carrying the world right now. Would like to hear any contrary views.