Basing readings on the large trade imbalance between the United States and Asia and the enormous accumulation of US bonds by Asian investors and central banks, the world finance experts suggest that the fate of Washington's economy is in the hands of Asian investors.
Hence, if the Asians were to stop financing that country's current account deficit, the results could be dramatic: the demand for US bonds would collapse; the dollar would depreciate; interest rates would soar; and the economy would suffer a slowdown.
Further, the Asian and other developing nations--22 in all, including China, Pakistan, Saudi Arabia, India, Argentina and Brazil--would finally have the possibility to use the capital they had exported to the United States in recent years for investment and consumption at home.
This is sum total of a study the UN Commission on Trade and Development (Unctad) has included in its latest report on world situation, received in fuller details here on Tuesday afternoon.
The scenario however close to reality it may be, the UN researchers believe that the contention is disputable and has more negative effects than positive for the bond holders.
One negative effect the Asian action would have to slow down the demand of their goods in the United States which currently favours them.
It will affect the exports and production of goods, putting their sale and manufactures under pressure, make imports into Asia cheaper.
These two mechanisms, the study surmises, would lead to a falling of Asian surpluses in trade balance with US and also "diminish net capital flow" from Asia to Washington.
Such a situation would depreciate the dollar, leading to turn Asian current accounts into deficit and thus reverse the net capital flow from East to West.
The study also discusses the implications of Asian investors turning from US to European assets at the cost of former appreciating the euro against dollar as well as the Asian currencies but would not alter the exchange rate between the latter two currencies.
In his foreword to the report, UN Secretary-General Kofi Annan has briefly discussed the implications of exchange rate management at the national and international levels, and has called for "effective action" on the recommendations to achieve the Millennium Development Goals.
"Now that an economic recovery is on the horizan, we must move swiftly to pave the way for an extended phase of growth that generates gains in all countries and for all parts of society", he concludes.