For Immediate Release
January 20, 2006
Contact: Kate Incontrera, 410 454-0417 or kincontrera@dailyreckoning.com www.dailyreckoning.com: Can The Fed Prevent Japanese Investors From Sinking the U.S. Economy? BALTIMORE, MD - The Federal Reserve is losing its influence over America's economy, one expert warns, a fact highlighted by the recent chaos in the Japanese stock market. On Wednesday, trading on the Tokyo Stock Exchange was halted when an overflow of sell orders threatened to crush the exchange's archaic computer systems. This latest blow to the world's second biggest stock exchange could undermine the Japanese capital markets, just as the country's economic recovery was gaining momentum. But for American investors, the real danger is that investor capital could flee Japan and run back into U.S. Treasuries. That would send long-term interest rates tumbling and create an inverted yield curve. "The lesson," says Addison Wiggin, author of NY Times bestseller Empire of Debt and editorial director of The Daily Reckoning, "is that the globalization of the financial markets has placed an ever more precarious amount of U.S. debt in the hands of foreign central banks and investors. "That means the fate of the American economy is moving out of America's hands. It increasingly rests in the hands of foreign investors and central bankers who may or may not have our interests in mind when they make financial decisions." Japanese investors buying U.S. debt and inverting the yield curve is just one example. But Japan is not the only country wielding this kind of power. "If China wanted to start selling U.S. debt rather than gobbling it up," warns Wiggin, "they could really drive up interest rates in our country. And the Federal Reserve would have very few options to counter it." "Right now, the Chinese would be crazy to upset the trade cycle in place. But in the future, who knows what they'll do." For more from Addison Wiggin, see http://www.dailyreckoning.com Addison Wiggin is editorial director and publisher of The Daily Reckoning. He is also the co-author, along with Bill Bonner, of the recently released New York Times bestseller, Empire of Debt: The Rise of an Epic Financial Crisis. Brought to you by Agora Financial, and written by the NY Times bestselling authors, Bill Bonner and Addison Wiggin, The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing and everyday life into an educational and entertaining format that has been engaging their readers for over six years. SOURCE www.dailyreckoning.com #### | 
