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more on ANY OPPOSING VIEWPOINTS djf Krugman: Economic Crisis a Question of W...
From: David Farber <dave () farber net>
Date: Sat, 27 Nov 2004 14:42:32 -0500
Begin forwarded message: From: Travis Kalanick <travis () redswoosh net> Date: November 26, 2004 6:55:42 PM EST To: dave () farber netSubject: RE: [IP] more on ANY OPPOSING VIEWPOINTS djf Krugman: Economic Crisis a Question of W...
Reply-To: travis () redswoosh net Dave, There are a few facts that are not covered in the articles regarding thepossible catastrophic devaluation of the dollar you have forwarded. Some of
them, I would argue, fly in the face of the catastrophe being painted bythose pundits. Here are a few of those facts I spent some time aggregating from the EU's site as well as the CIA Factbook (whose numbers basically jive
with each other). End of 2003 figures for the EU-15 GDP--$9.6T Real GDP growth--0.9% Debt as % of GDP--69.1% End of 2003 figures for the U.S. GDP--10,990 Real GDP growth--3.1% Debt as % of GDP--62.4% It's a hard sell to a prudent currency investor to convince them that he should make a long-term, wholesale move of his dollars to Euros when:1) the public debt issues are more substantial in the EU than in the U.S,
2) the economic outlook for growth is substantially weaker in the EU than in
the U.S. Clearly, the Euro is showing its relative strength vs. the dollar in theshort term, but too much devaluation too quickly against the Euro will have
a much more serious impact on the European economy--an economy with morerigid labor structures than to be able to nimbly adjust to major currency
devaluations against the dollar. And given that the Euro has *weaker*fundamentals than the dollar (does this qualify as a Euro "bubble"?), it is unlikely that any long-term investor could rationalize a rapid move to the
Euro.I believe what we will see instead is a mid-to-long-term, slow devaluation of the dollar currency where U.S. politicians will likely *have* to mitigate overspending while investors mitigate currency risk during that period by
hedging against that slow devaluation. Travis Kalanick Red Swoosh, Inc. Founder travis () redswoosh net (v) 310.666.1429 (f) 253.322.9478 AIM: ScourTrav123 ------------------------------------- You are subscribed as interesting-people () lists elistx com To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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- more on ANY OPPOSING VIEWPOINTS djf Krugman: Economic Crisis a Question of W... David Farber (Nov 27)