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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (19556)	5/24/2003 1:20:33 PM
From: yard_man	Respond to of 89467

Noland excerpts a bit of AG and others -- wish he did more - >>Alan Greenspan: “Senator, as you well know, the issue of how much you can build up net claims against American residents is a function of not only - and this looks at a large function – of the willingness of foreigners to hold and seek those claims. And indeed, what we have found over the years is that when the exchange rate for the dollar is rising, it, of necessity, means that there is a greater demand for dollars, and that’s what occurred during a significant part of the 1990s. But the obvious problem that you raise is, over the very long run, the ratio of cumulated claims against the United States, more specifically those which relate to debt, create interest charges which, in turn, are part of the current account deficit, which means that it is quite possible to get into an unstable equilibrium.” (My comment: If Mr. Greenspan believes escalating interest charges is the chief issue he is clearly mistaken. Today’s “unstable equilibrium” is associated with Credit Bubble dynamics. The U.S. Credit system and Bubble economy require unrelenting lending, financial leveraging, and speculating excesses - the rampant liquidity that is at the same time creating an unmanageable accumulation of dollar assets globally. It is “unstable” precisely because it is unsustainable.) Alan Greenspan: “And that’s an issue which economists have discussed quite significantly with respect to the United States. And as I think I’ve mentioned to you, Senator, I’ve been raising this issue for years and forecasting a major contraction eventually of the current account deficit, and I raise it every five years. I’ve been wrong every five years.” Senator Paul Sarbanes: “I know, but if we ever hit it, it almost would be like falling off the cliff, would it not? Alan Greenspan: “No. I would think not, largely because the stock of dollar assets is so huge and the ability to move them around is fairly limited, that I think adjustments don’t occur off the cliff… The question is, what do the holders do with those assets? They’re so heavily involved in dollar-denominated claims that while obviously they can move out of them, and would, there are limits to how fast these things tend to move.” << If the weaker dollar is not helping exports -- what's the pt?? And imports are growing -- then the dollar value of those imports are growing even faster?? Time for some non-linear feedback?? Are foreigners actually going to beat us to the punch in reducing demand -- got stagflation?? Gonna hate to admit Jim Willie was right <vbg> I still think the trade deficit will come in -- maybe later this year ...