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Strategies & Market Trends : Position Trading Forum -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Jordan who wrote (979)	9/5/1998 11:49:00 AM
From: mark g	Respond to of 7247

While I agree that domestic consumption has been one of the principal engines of growth, I also must consider that the source of this growth comes from outside the US. If the Japanese should pull out of the US bond market the stock market would see that as a negative. Keep in mind that 20% of the jobs in the US are a direct result of trade with Japan. Any attempt to recall some of that investment would cut into job growth. For the consumer economy to flourish requires incomes to continue to grow. The political situation in Japan could make it difficult to maintain foreign reserves in the face of an unemployment rate that has nearly doubled in the last two years. I would be disinclined from calling this theoretical, rather, one of a number of possible near term futures. Fewer jobs lowers demand. The global economy is less competitive than interdependent. Besides, with the US economy doing as well as it is, w hy lower interest rates and risk overheating? I don't mean to sound like a pessimist, actually I'm assuming things will not get out of hand. But to see the US as a central hub in the geoeconomic wheel, exempt from external influence would not be looking at the big picture, especially considering the job growth since 1990 and the dependence of those jobs on economies that appear to be a little shaky at this time. As I said, I don't think a massive recall of foreign reserves is in the cards right now, but it is well worth keeping an eye on. Lowering interest rates, however would make me a little nervous. Hoping for the best, Mark.