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IS AMERICA READY FOR THE NEXT RECESSION?

The economic description of a recession took a hard right turn with Mexico's 1995 recession and subsequent bailout.  In the last half of the 20th century, the normal recession is 2 negative quarters of G.D.P. growth followed by slow deterioration of the economy.  But a more dangerous form of a recession started with Mexico's recession of 1995.  Trade deficit led recessions were witnessed on television in Mexico, Korea, Hong Kong, Malaysia, Thailand, Russia, and Brazil with a timetable of 6 months for completion.  During this time the economies were severely damaged.  Millions of jobs and tens of thousands of small and medium sized businesses were crushed.  After 6 months the International Monetary Fund stepped in to dictate local economic policies for recovery.  This is dangerous for the United States.  The precedent has been set to have a regular recession followed up by a trade deficit led recession back to back.

    Countries who have had a trade deficit led recession had these similar economic situations:

1. Large capital input

2. High flying stock markets

3. High trade deficits

4. Deteriorating currency value

     In 1995 the dollar decline revealed several verifiable negative facts about our own nationwide economy.  The dollars negative movement affected the following economic areas:

                    1.  Trade deficit friction
                    2.  Dis-investment in America
                    3.  Bank solvency problems
                    4.  Price hikes
                    5.  Increased interest rates
                    6.  Stock and bond market fluctuations
                    7.  Irregular Federal Government financing
                    8.  Rising unemployment
                    9.  Increasingly, the Federal Reserve is forced to make a decision between different sectors of the economy and foreign confidence in the dollar
                    10.  Social and moral decay

    The consumer is the driving force behind the economy.  The economy is the driving force behind the trade deficit.  The trade deficit is the driving force behind the recession.  Each year this economic phenomenon persists (the greater the reality of severe economic disruptions in the United States.)

    Since 1983 we have stated that the falling dollar would be a major reason for the trade deficit to cause an economic disruption in America.  During the summer of 1998, the news media showed us a number of the same 10 elements with negative movements mentioned above also had negative movements when the dollar value started to increase world wide.  The dollar has a narrow trading range world wide and if the dollar trades out of that trading range (up or down) it will cause economic disruption of the U.S. economy.

    The dollar downside against the Yen is 95 Yen to 1 dollar and the topside is 135 Yen to 1 dollar.  If the dollar trades above or below these levels, it will start to cause economic disruptions on the economy of the United States

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