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

To: jimmg who wrote (49921)	1/16/2006 7:21:46 PM
From: GST	Respond to of 110194

Take a closer look at where the supply comes from. Our credit is supplied offshore. Our commodities are supplied offshore and our services are increasingly coming from offshore. We have a current deficit of about 2 billion US$ per day -- per day! Astonishing really. That is how much capital we must find outside the US every day of the week, every week of the year. Our consumption depends on our ability to maintain the value of our dollar which in turn depends on finding somebody outside the US to kick in another $2 billion each day. We give people our debt paper or sell them our assets and they provide most of what we consume. Take away the strong dollar and you have rising prices. The more our economy slows, the harder it is for foreigners to justify and manage financing our debts. Our debts are not going to go away -- we pay them or repudiate them. And our need for foreign capital does not go away if our economy slows -- our reliance on imported capital goes both for private consumption and for government debt. A slow economy makes our government deficits grow. We are no longer the strong economy at the center of the global economy. We are, sadly, the economy that others have propped up while we engaged in excessive spending and borrowing -- and we did this assuming that it could go on forever. But it can't and won't go on forever. When our economy grows we can finance our debts by going deeper in the hole with imported capital. When our economy slows, the capital from abroad will dry up faster than our need for it will go down.