It's time to ring that warning bell again. The trade figures out of the United States are getting worse than ever and we in Asia will have to pay some of the price. In particular it is the steepening curve of the US current-account deficit that looks so dangerous. It is now running at US$30 billion a month, or 4 per cent of US gross domestic product, a record on both counts. In relative terms the 4 per cent figure does not look huge, but when you get to the world's biggest economy the absolute dollar figures become just as important. That deficit represents a US trading position with the rest of the world and when it is corrected, as it inevitably must be, the pinch will be felt as much by the rest of the world as by the US, and then US$30 billion a month becomes a big figure. The reason that no correction has yet come is not only that US consumers in the euphoria of their economic boom don't seem to care that their finances have become so skewed but that foreigners are still happy to fill the hole by pouring ever more money into the US. As the first chart shows, foreign capital inflows to buy non-treasury securities in the US have alone been enough to compensate for the current-account deficit, leave alone any other foreign capital inflows. The US is still considered the hot market, particularly Nasdaq with its booming technology stocks now trading at 150 times earnings. As long as that boom continues US consumers can continue to splurge on purchases of foreign goods, safe in the knowledge that foreigners will provide the money for all this spending. Eventually reason will return and the Nasdaq bubble will burst. The foreign inflow will then dry up or even turn to an outflow and the consumers will then have to tighten their belts severely as the money vanishes. Not only will this mean a sharp drop in US imports, which will certainly hit Asian exporters hard, but US interest rates will also rise, forcing Asian rates up. It will be the proverbial double whammy and will put an end to the 1999 Asian stock market recovery. Even before it happens, however, Asia is likely to feel the pinch. There is no sign of the US consumption boom slowing down, which only means that ever more foreign money will be needed to fuel it, just at a time when Asia itself needs that foreign money badly to rebuild its capital stock. Either way we will run into more difficult times. If the US consumption boom continues, the proceeds from the rising exports we ship there will just get sucked back into the US again. And if it all comes apart, those exports to the US will stop rising. As the second chart shows, it has been US demand that has really pulled our exports up since mid-1997. That line will go straight down again if the demand wanes, and the encouraging Asian trade picture will start to look distinctly discouraging then. We simply cannot ignore this danger any longer.