On Tue Oct 29 2002, Bradford DeLong wrote:
> Ummm... Am I in the right universe? I mean, I don't understand why the
> dollar and the current account are where they are with no visible means
> of support...
That question reminds me of another one I'd forgotten about. Remember those stories in August about how the Saudis were withdrawing their US investments, half out of fear and half out of pique? The rumors were that 100-200 billion had been fairly suddenly withdrawn, and that SA held up to 400 to 600 billion of US investments total. If our current account deficit requires 1.3 billion a day just to stay afloat, and the conditions for sucking in that money are considerably worse than they were a few years ago, wouldn't a hit this size on top of that be a big deal to the dollar? And yet nothing's happened. Was it all a fake story? They didn't withdraw their investments? Or is everything we know about financing deficits and the level of the dollar just not true any more?
Michael