Thursday, April 28, 2005


Credit, Trade Issues Coming To A Head

The junk bond markets are signaling a pull back in the economy. "Almost $1.5 billion in high-yield bond offerings were postponed last week, some leveraged buyout deals could be in trouble, and mutual fund investors are starting to cash out of high-yield bond funds."

The trade and currency problem with China is making headlines too. "As for the United States, its assumption that it can have continuous 3 percent GDP growth based almost entirely on other nations' savings is even more remarkable. The buyers of U.S. debt have helped sustain U.S. illusions about its economic prowess. More the fool they. But the United States itself is mainly to blame for abusing the role of the dollar to buy growth. China is right that the trade deficit is a U.S. problem that will not be solved by a yuan revaluation."

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