The Mark of the Bust

Martin Mayer on the fate of the dollar:

What we have to watch out for is a sudden and drastic increase in foreign official holdings. Rapid growth in this number in the late 1960’s and 1970’s forecast the recessions of the early 1970’s and 1980’s, and it could happen again.
Recent large increases in foreign official holdings indicate that foreign private investors see fewer attractive places to put their money in the American economy. They could presage a significant fall in the price of American assets, stocks (witness the recent drops in American stock markets) and bonds and real estate and all, and a hard landing for a world economy still floating on the crest of cheap credit.

Posted by on June 15th, 2006 at 6:48 am


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