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

To: TobagoJack who wrote (53816)	9/29/2004 9:29:36 AM
From: KyrosL	Read Replies (1) \| Respond to of 74559

China is not transfering savings to American consumers I partially agree with you Jay. Some of the savings are transferred but without the US there would have been no savings to begin with, so it's a big gain for capital formation in China. Plus, the savings will continue for many years in the future, and less and less of them will get transferred as Chinese prices approach world prices.

To: TobagoJack who wrote (53816)	9/29/2004 11:33:25 AM
From: Taikun	Respond to of 74559

<the funds are heeding the signal by selling off what they bought last year and paying down their USD loans.> and buying US Treasuries it seems. Hedge funds are increasing purchases of US Treasuries. Perhaps they want a little more carry trade? Borrow USD at 2.5% and invest at 3.9% in the 10yr. Hmmm. At least the currency risk is removed. Although it would seem intuitively attractive to want to play USD deflation perhaps in a rising interest rate scenario this is scary enough-since investors may be attracted to what they deem a secure yield instrument like Treasuries amidst a flat stock market. As the yield curve turns down, they can book capital gains in USD. Treasuries look like a good buy. AG has to raise the front end of the yield curve-the overnight rate-to have wriggle room for the next recession, and the hedgies know it. Technically speaking, it is a safe bet.