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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (7325)	2/8/2004 12:34:14 PM
From: Louis V. Lambrecht	Read Replies (1) \| Respond to of 110194

Haim - not discussing the relative debt level. The point I try to make, in other words: CB interventions already are difficult to coordinate when one currency has a problem. Currently, JPY is too high vs. the Dollar, sez. BOJ EUR too high vs. Dollar, sez some German exporters. Here is a table of import-exports from the three areas: (ref: ecb.int I am trying to get the actual data from the IMF) Euro Area USA Japan Exports of goods % of GDP 15 6.5 8.7 Exports of goods and services % of GDP 19.7 9.3 10.7 Imports of goods % of GDP 13.2 11.1 7.4 Imports of goods and services % of GDP 17.7 13.3 10.1 Exports (share of world exports) % 31.2 12.4 5.8 Note: Euro area statistics are seemingly hige numbers, but remember that expeorts to UK, Scandinavian countries, and East European countries are considered IMEX, so the "European Union" statistics are very much lower than "Euro Area" statistics). I take this table for purpose of trade deficit: while Euro area and Japan roughly are flat, the US has a deficit of 4.6% of GDP. Meaning they have to let the Dollar slide in order to help the exporters and close the trade gap. Stopping the slide of the Dollar, who the heck would profit from higher Dollar prices? Not the US economy. But who? BOJ is working to strenghten the Dollar (and weaken the Yen). No success. All what the ECB said, they don't like "volatility". Not concerned with the exchange rate. Exports outside Europe are below 10% of GDP. The G3 are mostly local economies. Losers of a sliding Dollars are the foreign CBs and large banks which hold Dollar debt: these want stronger Dollars as their reserves are melting. Winner is the Fed as she gets more currencies in return for debt. And foreign CBs must resume buying US debt as the US Dollar is part of their monetary reserves.