Double D

Discussion in 'Economics' started by ShoeshineBoy, Jan 4, 2004.

  1. The following CBS article goes into the good, bad and ugly of the "double D" that's facing us: budget and trade deficits.}&siteid=mktw&dist=&archive=true

    "More important, European and other foreign investors may begin a surge of buying U.S. companies and other assets, taking advantage of bargain prices for the dollar. America is on sale.

    Not least, for those investors who pay with euros and other foreign currencies, U.S. stocks are effectively selling at discounts. That should be another force sending U.S. stock prices up. The other side of the coin, of course, is that as the dollar continues to decline, foreign investors will see the value of their U.S. securities diminish. This can go on only so long before foreign investors decide to dump their fading U.S. securities."

    I hadn't thought about this, but supposedly a weak dollar will send equites up. Does anybody believe this? Does anyone believe this was responsible for the nice rally we had from march to september?

    Also: Does anyone think Washington will have the political willpower, now that the financial press is all over the double D, to make a change? Or is this all part of their master plan for another couple of years?
  2. ig0r


  3. RZTrader


    Reversing position is unlikely to come up soon of Washington's own will, and if it does, it will be very difficult - it is like trying to make a very large ship change direction in deep sea : it can be done, but the larger the ship, the larger the circle the ship will draw before reversing position.

    If Washington decides to finally take care of its deficit and debt, it will most likely be because of foreign pressures. Like always, the US population will serve as a human shield for the US elite.