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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Hawkmoon who wrote (3082)5/8/2001 3:35:31 PM
From: Robert Douglas   of 3536
 
When the Fed finally arrives at a point with interest rates where businesses are once more willing to invest and expand their businesses, based upon greater ability to generate profits on borrowed expansion capital, then productivity would increase commensurately.

Interest rates are only one factor in the decision to spend. The other two are profits and capacity utilization. Right now excess capacity is still too great to generate demand for expansion. And, as we have been discussing, profits will be squeezed during this period of rising unit labor costs. We can't rely on investment to turn around the economy. This business cycle was driven by investment and capacity utilization peaked out at a lower level than in any recession of the past 40 years.
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