On Sun, 28 Nov 2004 08:32:28 -0000, "Nebulous"
<Nebulous@pigtail.freeserve.co.uk> wrote:

>
>"MacHamish" <russj41@concentric.net> wrote in message
>news:s6vhq09mvvisdldbbnckcjhfhbes7r5t13@4ax.com...
>> On Sat, 27 Nov 2004 20:34:45 -0000, "Nebulous"
>> <Nebulous@pigtail.freeserve.co.uk> wrote:

>So what role did the international community play in the current American
>deficit and weak dollar- other than being a bit too willing to lend you
>money?

Some indefinable amount of it is due to the international community leaving
it up the US to shoulder the very costly burden of defense alone.  More
importantly, those nations, particularly in Asia, that artificially
supported the dollar in order to continue a long habit of exploiting the US
market for the sake of their own prosperity have contributed to exacerbating
the current state of affairs.

>> >One of the impacts of this has been rises in house prices and people
>> >remortgaging to buy consumer goods.
>> >
>> >Policy needed tightening at least a year ago to prevent a 'hard landing'
>but
>> >that wasn't possible given the political situation. So rates stayed low
>to
>> >help until after the election and the hard landing now seems inevitable.
>>
>> I can't deny that Greenspan has made some bad decisions in retrospect.
>> Perhaps his biggest mistake was not taking steps to slow the "irrational
>> exuberance" of the late 90's.  He recognized it for what it was, but he
>let
>> it run on.  It is still unwinding.  However, I don't think the current
>> situation is as dire over here as you seem to think it is.  We are a
>> resilient society.
>>
>Thats the point I'm making. It never has unwound. Interest rates were
>lowered very quickly to protect the markets and deferred the unwinding to an
>unspecified future date.

Of course the unwinding was from an artificially high starting point due to
the rampant mania of historic proportions of the late 1990's.  It was
reminiscent of the Tulip Mania of the 17th century except even more extreme.
The correction to more sane levels no sooner under way than 9/11 came along.
I think most people generally underestimate the economic impact of 9/11.
Quite a double whammy.  The adjustment in interest rates and addition of
liquidity were the only tools available to Greenspan to stave off a much
more serious global crisis.  It's easy to criticize him in hindsight.  I
think it's premature to predict that we're headed for a very hard landing,
but I would certainly agree that it's not going to be painless.

>> >Your arms budget and military commitments haven't helped the situation,
>but
>> >it was there anyway without the recent jaunts.
>>
>> Yes, and no one complained about it when we were the shield over Europe
>and
>> other areas of the world against communist encroachment, just as we are
>now
>> the shield against the Star and Crescent.  Come to think of it, no one
>> complained when the USD hit 120 on the index a few years ago, either.  It
>> was a feeding frenzy for out trading partners.
>>
>
>Currencies fluctuate over time for a variety of different reasons. If the
>dollar is too high or too low it generally reflects international sentiment
>about your domestic conditions. With a high dollar the consensus was you
>were doing very well domestically, at the moment sentiment is that you are
>running an unsustainable deficit and don't have the stomach to change it.
>The free market is very unforgiving you know MacHamish!

Yes indeed, and manipulated markets are even less forgiving.

MacHamish M$(D??(Br