Jay, I'm happy to say the world hasn't run out of money. Here comes $2.5bn in capital spending. NextWave is also selling a lot of shares to raise even more. Uncle Al is printing heaps and there is a lot that needs doing in the world.
Message 16239492
<HAWTHORNE, N.Y.--(BUSINESS WIRE)--Aug. 21, 2001--NextWave Telecom Inc. today announced that UBS Warburg has committed to provide the company with $2.5 billion in debt financing to fund the construction of its nationwide 3G wireless network.
UBS Warburg has also been engaged by NextWave to serve as the company's financial advisor and will assist the company in consummating its plan of reorganization.
"We are pleased to have formed a relationship with a world-renowned financial institution such as UBS Warburg. Their financial resources and global wireless expertise will help us deploy our advanced IP-based wireless network and introduce the next-generation, high-speed mobile Internet services that the market is demanding," said Allen Salmasi, NextWave's Chairman and Chief Executive Officer.
NextWave will utilize the financing to support the deployment of its third-generation CDMA2000 wireless network. NextWave's nationwide network will provide broadband mobile data service at speeds of up to 2.4 megabits per second and support a wide range of next-generation mobile applications including full web access, streaming video, high-fidelity audio downloads, multimedia messaging, and corporate VPN access. contd... >
On that item you linked, if that is the conventional thinking, I would run a mile from them because they are off their rockers...
<"Most Asians are taught to spend out of income, not capital," said Dio Wong, equity strategist for the Asian-Pacific region excluding Japan at Merrill Lynch. "If you cut interest rates further, you're more likely to annoy people because you're effectively reducing the disposable income of the consumer." >
Anyone who has ever had capital which they earned themselves knows that they should spend out of income, not capital, unless they are aging and it's time to have a bit of fun and SKI [= spend kids' inheritance]. So it seems trivial to point out that Asians have the financial insight to spend out of income. I would be amazed if they didn't. I am surprised that they think such a thing is worth saying.
On the second part, he goes from trivial to absurd. If you cut interest rates further, exactly half the people will NOT be annoyed, they'll be happy. The other half will be annoyed. Those who are annoyed are those holding cash whose interest income gets a haircut. Those who are happy are those whose monthly interest bill gets a haircut.
In terms of purchasing power, there is no difference other than that the customer becomes the creditor rather than the lender. But either way, the same amount of money is available to spend.
But, there is a slight difference. When interest rates are cut, the governments get less tax! Good. So actually, the total money available for spending goes up. Yes, I know governments spend money too, but they spend it on stupid, uneconomic ideas with no [or little] return on investment. Yes, I know Hong Kong government made a killing in the Hang Seng when they waded in and bought up hugely during the Asian Contagion, but that's an exception. The Kiwi government pours billions down the gurgler every year with nothing to show for it = no return on investment [not even a sociological one, which they claim to achieve].
So, interest rate cuts are bad for governments, who get to rob people less. They are good for shopkeepers and other merchants who get more customer cash coming in. They are bad for lenders, who have to go back to work. They are good for creditors, especially those who borrow to buy productive enterprises.
Since low interest rates reflect low inflation, that's also bad for governments because it means they aren't getting an inflation tax [by printing money, which causes inflation if they do too much of it, they are diluting the existing cash holders].
It's all a LOT of fun. I wouldn't want to be a cash holder and lender right now, with competitive devaluations and money printing going on around the world.
Dio Wong is wrong. Interest rate cuts don't reduce the disposable income of the consumer.
Quoth Mq. |
