Re: [OPE-L] Crashes, adjustment, and the long-run

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Mar 23 2006 - 11:36:37 EST


>
>I think that US economy is not in good shape and CAD is a symptom of
>disease not of good health.
>
>Cordialmente
>Alejandro
>--

Dear Alejandro,
The capital inflow seems to be financing war related government deficits
and real estate speculation, not even speculative high tech investments
which could arguably have some positive effects on profitability via
reduced turnover time, lower capital costs, streamlined inventories, etc.
This would seem to indicate that both the US and its creditors are
not in very good health.Yet this cheap money is fueling the
US economy as what would otherwise be excess capacity is worked down,
preparing the conditions for a real upsurge in capital investment, no?
Especially if the Fed accommodates in, say, early 2008...
Yours, Rakesh


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