Jim Devine query

[Greg Nowell]

If the dollar fall  vis a vis the yen, the effect is
opposite of my post yesterday on Japan.  As the dollar
increases agains the yen, banks must increase their yen
reserves against their dollar obligations.  To do this
they have to contract lending.

If the dollar falls, they can increase lending because
their need for yen reserves against dollar loans
decreases.

We can expect that if there are serious international
negotiations about the Japan situation that several US
rate cuts may be in the cards.  A fall in the dollar
would boost Japan's banking situation and decrease the
US trade deficit, or at least, decrease the rate of
increase in the US trade deficit.

-gn

--
Gregory P. Nowell
Associate Professor
Department of Political Science, Milne 100
State University of New York
135 Western Ave.
Albany, New York 12222

Fax 518-442-5298