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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (38139)	6/25/2001 3:47:37 PM
From: Annette	Read Replies (2) \| Respond to of 65232

"Japan is the world's largest creditor. They hold almost twenty percent of the U.S. government debt. Fifty years ago it would have been unthinkable for the Treasury Secretary of the world's biggest debtor country to bark out orders to the Prime Minister of the world's largest creditor country on how to run its economy. Americans can erect trade barriers to keep Japanese products out of the United States, but the Japanese can, in turn, pull the plug on American financial markets. For now the Japanese are content to pour their savings into American financial markets because of the soaring stock market and the favorable interest rate spread - short-term interest rates in the United States are five percentage points higher than those in Japan. But someday the Japanese will want to repatriate those funds. The specific event that triggers the repatriation cannot be predicted: it could be a major earthquake or a collapse of the banking system. That it will eventually occur is inevitable, if for no other reason than that the rapidly aging Japanese population will soon want to draw on their savings to finance their retirement. When they do, the United States will suddenly be deprived of the "fix" of capital inflows upon which it has become dependent. America will have to go "cold turkey," and the consequences will not be pleasant. " dang, I forget the link...but it's a quote from an article.