Thursday, May 18, 2006
Why investors are so nervous?
When the US economy become weak, together with a large budget deficit, would combine to produce high interest rate and a weak dollar --- a disaster scenario. The worst scenario would be a catastrophic collapse of the dollar.
The capital inflow to US must be watched closely. From observations, seems that the rise of interest rate cannot generate the necessary domestic savings to finance the budget deficit. The system is unstable. But, the Fed are not stupid. They won't drive the economy this way, just the investors are too nervous. What next?
The capital inflow to US must be watched closely. From observations, seems that the rise of interest rate cannot generate the necessary domestic savings to finance the budget deficit. The system is unstable. But, the Fed are not stupid. They won't drive the economy this way, just the investors are too nervous. What next?
# posted by Lobo @ 6:31 AM 
