Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (18860)	5/10/2002 8:47:56 AM
From: Moominoid	Respond to of 74559

I shuffled my money recently too - invested in US visa application :) People here are universally shocked when I tell them how much it cost LOL ADSX should be fun in the next day or two. Sold out of Pacific Dunlop reincarnated as Ansell. Though I think I will be back in again later. That's a better LTBH I think than RAD and the like (ANN.AX). Rode from $A4.15 to $A6.35. Colonial First State Global Resources Fund continues to hit new highs. You might also consider NNDS - my brother works there :P

To: TobagoJack who wrote (18860)	5/11/2002 4:49:16 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

"...there is no doubt that the dollar would have to decline significantly to bring the US current account back close to balance. With exports representing just about 10 per cent of GDP, the US would need to increase their volume by 40 per cent to eliminate its 4 percentage point current account gap. But as it is by far the largest economy in the world, such a change would require a significant drop in US export prices - so the real increase in exports required would have to be larger and hence the dollar fall bigger. The same logic would apply, were the adjustment to take place via reduced imports. The faster growth of imports relative to exports has led to a huge US current account deficit, requiring net capital inflows (at the prevailing exchange rate) of at least Dollars 400bn (Pounds 275bn) every year. So far this has not presented a problem but the deficit continues to rise. The Organisation for Economic Co-operation and Development forecast the US current account deficit rising from 4.1 per cent of gross domestic product last year to almost 5 per cent in 2003. Few countries have supported a current account at that level for long. It is even harder for the world's largest economy, sucking in more than Dollars 500bn or close to 10 per cent of global gross saving every year. If the US attracted any less than this at the prevailing exchange rate, the dollar would fall automatically. Investors, therefore, need to be super-confident in the US as a location for their assets. Currently, they have many reasons for caution. Global implications So no country could be immune from its effects. In the US a lower dollar would enhance domestic expenditure, redirecting money spent abroad back to US production, although these gains would be offset by higher prices from more expensive imports. These adjustments would be welcome, although difficult to manage. Outside the US, the effects would be more challenging. No industrial country could escape the effects of such a large change in the world's pattern of trade. The main losers would be those countries that have relied on exports to the US for their domestic economic growth. Japan would be particularly vulnerable: domestic demand growth there has exceeded 2 per cent only twice in a decade. And the eurozone, with its equally lacklustre consumer demand, has almost as much to worry about. The advantages of reduced inflation would not offset the fall in US demand.