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To: AntiGuv
One more thought before we all sleep tight....or go back to work like some of us do...

Imagine the assets owned by the Asian and Europeans in the USA in a deflationary spiral. Would they dump them or hold them? I think they are so scared, so worried, as if they sell the assets they hold here, we will have to do the same there. I'm so glad Bretton Woods was such a bleeping success.
95 posted on 07/30/2003 8:19:11 PM PDT by Beck_isright (Remember the Blue Ridge Corporation!!!! Damn the torpedoes and SEC, full speed ahead!)
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To: Soren; arete; Beck_isright; expatpat; Orangedog; Tauzero
Imagine the assets owned by the Asian and Europeans in the USA in a deflationary spiral. Would they dump them or hold them?

That's actually part of the key nexus I alluded to above in bringing Japan into this global equation. The Japanese export economy simply cannot tolerate American hyperinflation. As their banking sector and bond markets came under pressure, they would need draw on their American assets to maintain their solvency - as would other Asian economies. This would suck liquidity out of the American economy even as the Fed attempts to increase the monetary supply and prevent the onset of deflation induced in part by East Asian devaluation.

The Europeans would seem stuck between a rock and a hard place. Simultaneously service-based and export-dependent by sector. They'd want to pull assets out, but they'd have no obvious havens for their funds since their markets would be under even worse pressure. I'm uncertain what they'll do in the final analysis.

We are in an era of economic M.A.D. - where any given economy might sustain itself over the long-term only at the expense of another.

99 posted on 07/30/2003 8:42:20 PM PDT by AntiGuv (™)
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