On Feb 5, 2007, at 11:13 PM, Yoshie Furuhashi wrote:
On 2/5/07, paul phillips <[EMAIL PROTECTED]> wrote:
My followup question got lost in this reply so, in the light of
subsequent comments, let me ask the question of Doug and others,
why has
the employment rate held up despite the negative savings rate, the
deflating housing bubble and the contracting manufacturing sector?
China, Japan, and the Gulf states pay for American consumption,
keeping interest rates low.
They're lending the US the money. You make it sound like they're
picking up the tab.
The negative savings rate isn't a problem until foreigners stop
lending the US money, or US households suffer an outbreak of prudence
and rebuild their savings. Until those things happen, it's not a drag
but a stimulus.
Housing has, for now, stabilized, so it's not that much of a drag
anymore. And with energy prices down significantly, it's possible the
US economy could accelerate.
Doug
