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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DizzyG who wrote (520523)	1/6/2004 5:28:35 PM
From: ThirdEye	Read Replies (1) \| Respond to of 769670

That's a big bite for right now. I'll let you know if I get around to it.

To: DizzyG who wrote (520523)	1/6/2004 6:01:07 PM
From: DuckTapeSunroof	Respond to of 769670

Your posted chart indicates that Net Foreign Investment in the US has been on a steady decline for many years --- but has recently begun an especially sharp decline. I agree that the dollar has been too strong for a period of years, and that a steady, gradual decline would be a net positive for the US economy in the short-term (but always a negative --- versus the alternative of a stable, sound currency --- for those invested in financial assets). But, a collapse would be another thing entirely.... Re: "While this will probably not lead to a full-blown financial crisis like the one that has gripped Argentina for the past two years (where the nation's GDP shrank almost 11% in 2002) the mounting debt implies a steady drain on the American economy as resources are devoted to paying interest on it. A conservative measure of this debt service burden predicts that, absent improvement in the trade balance, almost 2% of GDP annually will be devoted to foreign debt service.3 To understand the magnitude of this debt, this much GDP devoted to servicing foreign debt amounts to about 10 times what the federal government spent on primary and secondary education in 2000." >>> An important point.

To: DizzyG who wrote (520523)	1/6/2004 6:07:27 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

"The most notable feature in the pattern of currency appreciations is that China, the nation running the largest bilateral trade surplus (i.e., exporting to more than they import) with the United States, has seen no appreciation. The Chinese government actively pegs the value of the Chinese yuan at a predetermined level to make Chinese products more competitive against U.S. goods. Two other nations, Malaysia and Taiwan, also actively set their currencies to the U.S. dollar, allowing almost no movement in their value. This pattern of currency changes implies that none of the increase in U.S. GDP in the short term will come at the expense of China, Malaysia, or Taiwan. Rather, the bulk of the adjustment to the lower value of the dollar will be borne by the euro area, Canada, Mexico, and Japan. Thus, the bilateral depreciation of the dollar to date has not been in proportion to the U.S. bilateral trade deficit. This pattern is shown in Figure 3." >>> Thus: some benefits to manufacturing... but no improvement for the US trade deficit (until the Asian currencies are forced to float... or we handicap their exports some other way.)