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

To: smolejv@gmx.net who wrote (33874)	5/18/2003 12:38:17 PM
From: Hawkmoon	Read Replies (3) \| Respond to of 74559

Too big to fail, eh? Dont cry for me, Argentina. Yeah.. it sounds shtty, but I believe it's the reality. Too many nations rely upon the US consumer markets, low currency exchange rates between their currency and the USD to subsidize their economies. The US economy equates to 30% of global GDP. The Euro is still the currency of a confederation*, and what the ECB wants (a strong Euro) is not always compatible with the political realities and needs in the various parts of the EU. The international banking community can bully nations, like Argentina, because they can. Argentina needs our loans to sustain their bloated government patronage and pension system (very European-like) more than we need to loan it more money. But bullying the biggest financial community out there, the US financial markets, would be a different trick indeed. But the next couple of years will tell.. Hawk

To: smolejv@gmx.net who wrote (33874)	5/18/2003 2:52:37 PM
From: KyrosL	Read Replies (3) \| Respond to of 74559

DJ, I am amazed that the precipitous drop in the dollar has not been accompanied by mass dumping of American securities by foreigners. After all they do own close to 15% of US stocks, more than 20% of US corporate bonds and some 40% of US treasuries. Because of this, I think that there is an even chance that Greenspan will succeed in reflating the US economy and the US may end up having its cake and eating it too in the following sense: on the one hand it will manage to depreciate the dollar against the Euro and Yen, thus gaining advantage in world markets vs European and Japanese manufactured products (and Australian and South American farm products). On the other hand it will manage to keep domestic inflation down, since Asian countries continue pegging their currencies to the dollar and supplying the US with cheap manufactured goods and services. The big loser in all of this may turn out to be Europe. One thing that may derail this scenario is if China and the other Asians decide to float their currencies. But Jay says that's not in the cards for now. So AG may manage to postpone the crash at least until Bush is safely reelected for his second term. Kyros