To: ahhaha who wrote (10712 ) 4/26/1998 10:21:00 PM From: philv Read Replies (2) | Respond to
ahhaha: Enjoy your excellent posts and find much in agreement. You display much uncommon sense. However, in your recent posts regarding trade imbalances, I find your explanations that trade imbalances don't matter hard to understand. I believe trade imbalances and the holding of T-notes by Japan to be significant to both countries, kind of like the Mexican stand-off. On the one hand, Japan can at any time try to redeem or convert these bills to say another currency, or buy their own, or even gold, much to the displeasure of U.S., while risking the advantage that the trade imbalance bestowes on their own economy, through production, jobs, profits, etc. In terms of exchange rates, I cannot see what incentive the Japanese have in strenghtening their currency visa-vie the $U.S. Holding so much U.S. foreign dollars, their big concern would be a declining dollar. They have benefited from the rising dollar and the high interest rate payed by the U.S. Should the dollar begin to decline, I would think the Japanese would look hard at selling as much as they could and buying something more stable, like perhaps the $Euro or some other currency or gold. But retaliation on the trade front will keep them from acting until such time that the reward outweighs the risk consequence.iht.com :80/IHT/TODAY/SAT/FIN/tcon.html
