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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (533)	4/29/2003 11:12:23 AM
From: philv	Read Replies (1) \| Respond to of 4912

You are saying as long as you can afford it, there is no limit to debt? That of course is the classic argument. Debt need not be repaid, but always "serviced". National debt compared to GDP is low, or personal debt compared to income is low, so keep on borrowing, lots of green space yet. It works as long as it works, but what happens if income drops, or interest rates rise, or God forbid, you can't borrow anymore? It isn't just the ability to service the debt, it is the prospect of ever rising debt without the assurance of ever rising ability to service it. Especially if the debt has been misallocated into a non-performing bubble. The red flags are flying high when you have to borrow money to pay the interest on the debt, whether on a personal or national level. And there are lots of examples out there with predictable consequences. I read an article stating that the US national debt will double to 12 trillion within 10 years. How much is too much?

To: GraceZ who wrote (533)	4/29/2003 12:45:20 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 4912

re: why don't Japanese sell dollars for marks... And why didn't they do this? They believe they can get a better return in dollar denominated assets this is incorrect. with all due respect, the situation is much more complex than you seem to realize.

To: GraceZ who wrote (533)	4/29/2003 1:50:24 PM
From: benwood	Respond to of 4912

So after Bush's four year term, servicing the trade deficit will require 4 MSFT's more than before his term, which I suppose was on the order of 4 or 5 MSFT's already. Pretty soon we'll be talking real money. <g>

To: GraceZ who wrote (533)	4/29/2003 3:32:09 PM
From: LLCF	Read Replies (2) \| Respond to of 4912

<And why didn't they do this? They believe they can get a better return in dollar denominated assets (whether they are right or wrong). > 1.) The guy's point is that they don't want to sell dollars and drive it down. Now, I wouldn't do that and DONT do that, but it's an arguable point. 2.) The entire bear argument on the $US is the imbalances in "flows"... Now, you can argue that since these flows have so far been sucked up and it will continue. But you can argue against it as well, as many reasonable economists are. I just happen to be on that side. <Now here you are smart enough to see that anyone who holds dollars has a choice of what to do with them, but you feel compelled to defend the guy who seems to think that our trading partners only have two choices, either buy dollar denominated financial assets > First I'm not defending the 'guy'... I'm defending the "point" of the 'dollar inbalances'. It's not my problem that the guy may not express himself or his ideas very well. He's certainly not here.... so.... Anyway, choice one is correct, you're not going to put the $'s in your mattress. So the question is own dollar assets or sell dollars. And while I find it hard to believe that on an individual [basis] the decision selling your dollars for another currency would include worrying about ""what I"m holding will be forced down by my own selling""... it certainly would make sense as an issue collectively, and actually is an issue for all large mutual funds in equities on a daily basis. <Why, because his theory supports your prejudice. Whatever happened to critical thinking?> Since I don't recall ever talking about the issue with you, I find it somewhat confusing you are judging my decision making process. <The debt created by the annual trade deficit maybe takes maybe 12-14 billion to service. It's an amount almost equal to the free cash flow from one American company, MSFT. > I think you've hit the bottom line here... you don't feel there are imbalances, SOME others do. There are any number of prominant WS economists on both sides of the issue... I happen to believe that position will be proven incorrect. DAK