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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (3133)	8/26/2001 9:28:31 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 3536

Roger that Tazio... However, if we find Central Banks not acting aggressively enough to force sound economic policies and restructuring, or not providing enough liquidity until the event occurs, it could result in a more severe economic downturn that would hurt all economies. It's obviously difficult using the monetary sledgehammer to cool an overheating economy, and then not recreate that tempo by overreacting to the correction. Hawk

To: X Y Zebra who wrote (3133)	8/26/2001 9:47:21 PM
From: Robert Douglas	Read Replies (2) \| Respond to of 3536

Which, in turn, (I would imagine), makes any investment in US Dollars all that more attractive than any alternative --all things considered including the risk/reward picture. It doesn't work that way in real life. Currency players are overwhelmingly momentum players and not value players like your comment suggests. The past several years, the dollar has been in a virtuous cycle where its own appreciation attracted investment, which increased its value thus attracting further investment. This has masked a giant structural imbalance in the current account. Now we (possibly) have the reverse happening. The dollar is declining as are dollar-based assets like stocks. This makes it less attractive for foreigners to put their money in dollars especially since they are incurring losses in their prior dollar investments. If this becomes a negative feedback cycle, we will see the dollar lose much more of its value. This side of the cycle will be much more vicious than the upside because it will amplify the nearly $500 billion current account drain. -Robert