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To: donald sew who wrote (57827)	11/19/1998 9:05:00 PM
From: VS	Read Replies (1) \| Respond to of 58727

Hi Don, fwiw, here's my take on it: Increasing imports+decreasing exports = higher trade deficits. The higher trade deficit by itself exerts downward pressure on the US$, because our trading partners, by running a surplus, are holding more US$ than they were holding earlier. Recently, this downward pressure on the $ has been more than countered by capital flows into the US, because of high real interest rates here. Result is that we have financed the trade deficit, and the $ remains strong. However, if this capital flow was to reverse due to lower interest rates here, then we no longer have the counter effect, and the $ should fall. What Seidman might have been saying is that even if capital flows do not reverse, a balooning trade deficit would cause downward pressure on the $, because we would be flooding foreign economies with dollars to pay for our imports. Hope that helps. Vince

To: donald sew who wrote (57827)	11/19/1998 9:33:00 PM
From: Margaret Mateer	Read Replies (3) \| Respond to of 58727

Hi Donald, I didn't really get it either but the key phrase was that our interest rates were going to have to go up "to get all those dollars back that will be floating around the world". So if you add x more months of increasingly negative US savings rate and x more months of huge trade deficits (Bill did say he expected the trade deficits to increase rapidly in the months ahead) where we spend what we don't have to buy bazillions of electronic toys from everyone else in the world I think that there comes a time where the world will eventually realize that we've become a...bad risk (us?) - a debtor nation of such humongous proportions that no matter how inventive, productive, all-powerful, tricky we are, well, maybe just maybe, the world will find a better and less risky place to invest their money...et voila - our rates will have to go up. Does this make any sense? I'm confused too. Economics, the dismal science. Night, Peggy Edit: He did add that this would not happen for a while and that perhaps not until the world financial system developed some faith in the Euro...all that $$$$ has got to be held is some currency! BWDIK

To: donald sew who wrote (57827)	11/20/1998 9:27:00 PM
From: NucTrader	Respond to of 58727

>>Still confused<< Notice I did not say I understood Siedman's post - I just thought the link I gave you was an interesting one at the edge of the ballpark, as opposed to dead center, so to speak. Give me something straightforward like calculus or chemistry - PLEASE no economics! As to how much money is out there on the sidelines waiting to come in, don't know that either. Did read an interesting article in USA Today's Business section, however. It was regarding LESS money. Less for LTCM whose assets were reported currently to be worth 6.5 million. In August of this year they stood at several hundred million..... Ain't this market grand!?! I must observe. The bears have baited this trap for the bulls with exceeding attractive bait....