Fred, thanks for the response. re: possibility of dumping of dollar denominated assets and resultant weakness in dollar, you write: > >Not necessarily. It might be due to a weakening of the US eonomy, in >which case the reduction of capital inflows could lead to more serious >consequences, as outlned in my article. Yes, I see your point. I suppose that if even with such strong productivity numbers American companies do not buy back and thus support their own stock--and the WSJ reported today on continuing CEO pessimism even in light of strong growth and productivity numbers--there is no reason that there couldn't be a flight out of the dollar. You very helpfully highlighted on the astonishing borrowing for the purposes of stock repurchase. I suppose that this was a result of 1. saving taxes , 2. boosting insiders' capital gains (have in mind an analysis by Harless and Medoff), and 3. signalling exuberant self-confidence to the capital markets. I do not know whether companies are doing big buy backs at present. There is a certainly a lot of money in the vaults of a Cisco, Sun, Intel, Microsoft, etc. that massive buy backs could be possible--maybe they are already supporting their own stock and preventing NASDAQ from finding its bottom? At any rate, if big companies do start repurchasing their own shares again in a very big way, I would not bet on a crash in the dollar. But I am no investment analyst! Best, Rakesh ps as for Susan Strange's Mad Money on Japanese repatriation of capital from the US Treasury market, I had pp.48-50 in mind
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