From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Sep 19 2004 - 09:26:16 EDT
At 8:52 PM -0400 9/18/04, Allin Cottrell wrote: >On Sat, 18 Sep 2004, Gerald A. Levy wrote: > >>For the benefit of listmembers who aren't up on children's stories, >>"Chicken Little" was an alarmist chicken who was hit on the head by >>an acorn and came to the conclusion that the sky is falling! More >>generally, "Chicken Littles" might be viewed as those who >>erroneously warn of impending disasters. > >Thanks, Jerry, for the clarification. > >In this case the possibly (or possibly not) impending disaster is the >unravelling of the US deficit on current account. > >It seems that the C.L.s may have a point (even if Catherine Mann has >abandoned their ranks). The US current account balance hit its last >major low under Reagan, in 1985-87. The current deficit under Bush is >about 50% greater, in proportion to US GDP, than that earlier figure. >One does wonder how long the other capitalist powers will be willing >to lend Americans the money to buy German and Japanese SUVs and the >fuel to run them. > >Allin Cottrell As CAD has already exceeded for years what many thought was sustainable, one should be interested in an inventory of the causes that has been made such a persistent, big and tendentially increasing CAD possible to this point. Does US political and military power play any role in this? Why has the value of the dollar not been sensitive to the size of the CAD in relation to GDP? >"I think in the long term what is happening is unsustainable but it >is very hard to predict a turning point in an unsustainable >situation," said Robert Blecker, an economist at American University >who, like Ms. Mann, describes himself as a former Chicken Little. >"You can see why something cannot keep going,'' he said, "but you can >also see why it keeps going."
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