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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (58991)	5/10/1999 1:36:00 PM
From: Freedom Fighter	Respond to of 132070

Don, >>If it is true that a large part of the U.S. bubble is due to Japanese capital inflows, and the yen carry trade, raising U.S. rates would only make things worse by increasing the yen/dollar ratio.<< I think you are making a good point. But I suspect that putting the brakes on the U.S. economy and popping the bubble would more than offset the interest rate differential. But that's just my guess. I suspect that some of the foreign inflows is just a momentum thing and the rest is chasing the only large lively economy out there.

To: Don Lloyd who wrote (58991)	5/11/1999 12:22:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Don, higher US rates would have made the carry trade more profitable but I am not sure how big a factor even greater profits from an already profitable carry trade would have been. Higher US rates would have curtailed some of the stampede out of bank accounts into mutual funds and curtailed some of the debt-financed corporate share repurchases. This is a complex issue and much more could be said but basicly the Austrian economists would say the Fed should have done more to contain or prevent this bubble. Unfortunately few see the problem until it is too late. Mike