COMMENTS ON 'THE GLOBAL IMBALANCES: WHAT IS THE PROBLEM?', THE 2007 WINCOTT LECTURE, GIVEN BY MAX CORDEN

The view that the United States will be able to run significant deficits for a long time is convincing. However, the proposition that it makes sense for foreigners to invest in the USA because of the high returns is questionable. The value of their US assets is at risk from dollar depreciation, inflation and government sequestration. Accordingly, there is a danger that foreign investors will cut and run, causing a brutal and swift adjustment.