> Rakesh, did you read Bernanke's latest on the savings glut? He says
> the U.S. has to invest more and reindustrialize to help get the c/a
> back into balance. He gave the speech at a Bundesbank conference when
> Wall Street expected him to talk about the subprime crisis and the
> credit crunch. Instead, he took a long-term perspective. I think his
> tacit message was a little slowdown would be a good thing, so don't
> expect a quick bailout. The markets didn't pay much attention though.
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Isn't US capital (and the Fed) faced with a conundrum of sorts: If the
dollar is pushed lower in a bid to redress the current account balance,
consumers will be squeezed and US exporters will be more competitive in
foreign markets, but won't US firms also be more vulnerable to foreign
takeover? Or does the Fed a) not really care about who does the investing so
long as it happens and the US manufacturing base expands or b) expect higher
domestic savings to provide the new investment and offset US reliance on
foreign capital? Both in tandem, I guess.