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To: GraceZ who wrote (222994)	2/20/2003 6:58:36 PM
From: yard_man	Read Replies (2) \| Respond to of 436258

>>Is it of any more consequence then it's seemingly endless rising last year? << The USD is the reserve currency of the world, Grace. Foreigners are no longer making a killing on their USD holdings, having had both price appreciation and the appreciation from holding USD assets -- instead they get a double whammy -- falling assets in USD and then a loss in currency translation. A fall in the dollar can only be a preview to the fall in value of paper as a whole -- especially debt paper (and consequently everything supported by debt) and debt is the engine of the supposed growth in economic activity. To say it doesn't matter is silly. It means nothing less than worldwide economic slowdown. "I'm still waiting for the trade deficit to be a problem"???!! Is that a joke?? The trade deficit is already a problem -- years of sustained trade deficits have left us in a terrible position. Very vulnerable as the slump goes world-wide -- any reduction in our willingness to buy foreign goods, increasing our debt, and there is a concomitant reduction in foreign investment flows and it's going to happen. This increases borrowing costs and there is a non-linear reinforcement -- slowdown begets more slowdown. Would not be true if we hadn't been running huge trade deficits for years. Japan is in a much better situation, if they would can some of the government expenditures and printing.

To: GraceZ who wrote (222994)	2/20/2003 7:57:55 PM
From: Tommaso	Read Replies (1) \| Respond to of 436258

>>>When the dollar was rising was it correlated to the trade deficit <<< Certainly it was. The overvalued dollar allowed United States citizens and companies to spend on foreign goods and services in a profligate way. Do you think people spend more money when prices are higher for what they are getting?

To: GraceZ who wrote (222994)	2/20/2003 8:52:54 PM
From: Earlie	Read Replies (2) \| Respond to of 436258

Grace: History suggests that large trade deficits typically are dealt with through a crushed currency. Sure looks to me like that is the route the buck is starting to tread. If the buck does continue to take it in the teeth, I doubt that the foreigners who currently keep the US stock and bond markets from the abyss ($2.0 billion plus a day required) will hang tough in the face of double losses. And if they depart,.... then what? The fact of the matter is that the US cannot finance its current debt levels on its own, never mind the burgeoning new deficits coming your way. The fact of the matter is that current US life styles would be rather dramatically altered if the foreigners take a hike, as the US economy depends on their continued participation. Hard to believe that US leadership has allowed things to come to such a worrisome state of affairs. "Don't worry, be happy" comes to mind. (NG) Best, Earlie