These are some comments by the chief economist of Bank of America.
a. The large US current account deficit and foreign accumulation of US debt will not unhinge the US economy as long as international trade and capital are allowed to flow freely.
b. Budget imbalances and current account imbalances do not move in tandem.
c. The US trade imbalances and large current account overseas have been the natural consequences in rates of economic growth, investment, and saving.
d. Decades-long worries that foreign investors will abruptly sell their US assets are misplaced.
e. The government's net costs of servicing debt owned by foreigners have been low and concerns are misplaced.
I would like to add that the two major issues facing the US are:
a. Protectionism.
b. Convince the American people that our role in the world economy is changing and we are now part of it with all the challenges and obligations this simple idea entails.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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