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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (29819)	2/24/2008 2:41:04 PM
From: RJA_	Read Replies (1) \| Respond to of 217752

blogs.ft.com From the blog... with commentary added... Brad Setser: Oil's steady rise amid ongoing evidence that US economy has slowed and a growing risk of a slowdown in Europe is something of a puzzle. Oil at least seems to have decoupled from the conjuncture in the G7. Part of the answer may be that the impact of a US slowdown on other countries in the dollar zone seems somewhat ambiguous. The pace of growth in China's exports to the US has slowed, but a US slowdown also means falling US interest rates, and in effect a more expansionary monetary policy throughout the dollar zone, including in those parts that are booming and look to be over-heating. Low real rates are expansionary, and real lending rates in the Gulf and China are likely lower than in the US. One last point: the United States' ability to ignore the constraints a debtor typically faces and pursue a counter-cyclical macroeconomic policy hinges in no small part on the willingness of the emerging world to continue to accumulate foreign exchange reserves at a truly incredible pace. [RJA: IMHO This will not continue. What cannot go on forever, will not go on for ever. In a nutshell, the case for PM's] The increase in reserve growth over the past year has broadly speaking been stabilizing — the credit crisis hasn't morphed into a dollar crisis.