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

To: MikeM54321 who wrote (8522)	4/27/1999 1:54:00 PM
From: Sam	Read Replies (1) \| Respond to of 9980

Fascinating. Japan calls for "prudent" policy management by US. Perhaps we should sell all US stocks, and put them into a country where the economy isn't "overheating". Where could that be? Japan warns U.S. economy may be overheating WASHINGTON, April 27 (Reuters) - Japanese Finance Minister Kiichi Miyazawa on Tuesday called on the United States to maintain prudent policy management as its economy may be overheating. Miyazawa also said Europe should establish the credibility of the euro and continue responding to cyclical changes to its economy. Miyazawa made the comments in a statement to a meeting of the International Monetary Fund's Interim Committee. A text of the statement was released in advance. ''In the U.S. there are concerns about the possibility of overheating. The U.S. authorities are thus expected to maintain prudent and appropriate policy management,'' Miyazawa said. Japan has come in for persistent economic criticism from the United States, with Washington calling for it to boost domestic growth. In his statement, Miyazawa also expressed optimism in the economy of Asia, saying that economic fundamentals in the region remained favorable. ''If they (Asian nations) continue to actively pursue economic reform by addressing their problems, in particular, corporate debt and troubled financial sectors, I believe that the Asian economies will steadily recover,'' Miyazawa said. Japan itself remained in a difficult condition, he said. In the fiscal year that began this month, Japanese financial institutions are expected to further dispose of non-performing loans, which will remove impediments to an economic recovery, Miyazawa said. Miyazawa also said that a closer monitoring of international capital flows was needed to maintain market stability and integrity. ''If we are to benefit from the efficient allocation of capital brought by the free movement of capital, we must respond appropriately to the enormous risks involved,'' Miyazawa said. ''It is essential to strengthen monitoring of capital flows on the part of creditors, in addition to close monitoring by the recipient country,'' he said. Ever since the problems of giant hedge fund Long-Term Capital Management surfaced last autumn, there was stronger awareness that problems of highly-leveraged financial institutions could generate risks in the financial systems of industrialized economies, Miyazawa said.

To: MikeM54321 who wrote (8522)	5/22/1999 8:22:00 AM
From: MikeM54321	Read Replies (2) \| Respond to of 9980

Re: US Trade Deficit for March Thread, Just thought I would keep this amazing figure handy for quick reference. Below is a heavily clipped article from the Washington Post. As trade imbalance figures are reported, it puts steady downward pressure on bond prices, hence upward moving interest rates. Then the higher interest rates attracts more foreign money, consumers spend more, which leads to higher trade deficits, and the cycle continues. I keep this posting this subject because it's such a phenomenon. No economist predicted we could have this size of trade imbalance without severe consequences. Every economist knew that Asia's problems were going to result in a HUGE trade deficit. They were right. Yet our economy has not suffered yet. That's the amazing part. Full US employment, steady US growth, strong US dollar. Who would have thought? And how long can it go on? And, more importantly, how does it end? MikeM(From Florida) ****************** U.S. Trade Deficit Hits Record High May 21, 1999-- The U.S. trade deficit hit a record for the third straight month in March, underscoring the worrisome side of America's role as the main source of strength in a sluggish world economy. The Commerce Department reported that the trade gap for the month widened to $19.7 billion, exceeding the record $19.1 billion set in February, as imports of oil and autos surged along with the boom in demand by American consumers. One bit of good news in the report was that U.S. exports rose in March, for the first time in four months. But imports rose even faster. Based on the figures for the first three months, the deficit, which counts both goods and services, is running at a $222 billion annual pace. That would far outstrip the record $169.3 billion posted last year. But the imbalance is also a source of concern for some policymakers and analysts, who fear that the United States -- which is essentially borrowing from abroad to pay its huge import bill -- could be vulnerable to severe financial instability if foreigners suddenly become reluctant to put money into U.S. stocks and bonds. Private economists...warned that the trade gap could eventually help to undermine the U.S. expansion. That is because it causes foreigners to accumulate massive holdings of dollars in payment for the goods they are selling to Americans. Those dollars are typically invested in the U.S. stock market or Treasury bonds, and if foreign investors suddenly become jittery and dump their holdings of dollar-based securities en masse, the result would be soaring interest rates and plunging stock prices. ...said Kathleen Camilli, an economist at Tucker Anthony/FSI. "The economy is running at a fast rate, driven by consumer spending, which implies the trade gap will continue to widen. And eventually that could be problematic for the dollar." Federal Reserve Chairman Alan Greenspan..."There is no evidence that there is any immediate problem coming because of the fact that we are, as an economy, growing far faster than the rest of the world,..we've seen no evidence of any unwillingness" on the part of foreigners to hold dollar-based securities....We see that in the fact that the value of the dollar has been reasonably stable," he continued. "But it is an issue which does disturb me."