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

To: marek_wojna who wrote (19037)	5/17/2002 11:23:24 PM
From: smolejv@gmx.net	Read Replies (1) \| Respond to of 74559

Hi Marek: in the following ref investavenue.com I just could not but wonder ... Here's CONCLUSION The widening of the U.S. current account balance over the past few years is the counterpart to the record capital flows that were attracted to the country due to high expected rates of return. Moreover, these flows were not used solely to finance a consumption boom. Rather, sharp acceleration in imports of capital goods(1) contributed to the significant increase in the productivity growth(2) of the US economy. Thus most investors have viewed the US current account deficit as sustainable because they have not questioned the ability of the country to make good on Its financial obligations. We expect foreign capital inflows from abroad to accelerate again this year, when U.S. economic growth picks up. Rising rates of return in conjunction with the underlying strong fundamentals of the US economy, will make U.S. assets attractive to foreigners. What if we are wrong? What if economic growth remains sluggish and foreign private capital inflows do not materialize this year? Then the dollar would most likely weaken over the course of the year as the current account deficit which would be funded partly but probably not entirely, by foreign governments (3), began to weigh on the currency. (1) Foreign direct investments meaning capital goods.I always thought FDI would be me and my monies on the WS and capital goods would be for instance ordering a factory or two (and not beamers) in Germany. (2) Huh?! So there's foreign investment -> higher productivity causality between the two?!. I thought it goes the other way: because of higher productivity (perceived or real) one lets US handle his or her money. (3) This one is the best: can someone translate that for me? I can understand that only as a concerted action by G7 to get the cart back on the road. Means a freaking serious scenario: "G7, meeting in Washington DC 10:00 am tomorrow. Bring IV bottles with you". dj