Since the 1980s, the U.S. trade deficit has been a constant force in the American economy, rising more some years than others, while corporate bond yields have been generally falling.

The flow of funds table for “Rest of the World” (F.107) shows that the excess of imports over exports has resulted in an increase in U.S. financial assets owned by foreigners.

These accounts also demonstrate the preference of foreign investors for fixed income securities and the dominant role that the trade deficit has played in the U.S. bond market.

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It is fashionable in some quarters to say that it doesn’t make much difference who wins the elections; the country will go on its own way without much change.

However, in 2004 this is probably not the case.

In several areas it may be important whether Bush or Kerry becomes the next president:

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