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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Mark Adams who wrote (22493)8/11/2002 1:56:45 AM
From: smolejv@gmx.net  Read Replies (1) of 74559
 
>>worries about consumer indebtedness are overdone<< There's two facets to it, what's the amount outstanding and what does it take to service it. >>the ratio of debt service to income peaked at ...<< etc argues from the second point of view, like "they're managing OK month to month". Of course, if the interest rate cuts tricked down to the consumer. They can even load the boat more.

The first facet, the size and the quality of the debt, is not mentioned in ML's report.

Here's this same facet on a little bigger scale:

Foreign direct investments ( in US, DJ
totaled more than $3 trillion at market
values and about half of that amount at
current cost. But looking at their miserable
return, it was gigantic malinvestment. In
1997, earnings from direct foreign
investments amounted to $43 billion. These
peaked in 2000 at $69 billion, collapsing in
2001 to $37 billion. The rate of return was a
little over 2%, measured on the costs of
these investments.

(from Dr Richebächer letter aug 2002)

I dont think the home team gets any better treatment. Well, the ROI is at least positive (ng). The question of course is (back to facet 2), if printing some more money and then letting them foreign investor put it back in again is the way things will go. Because the biggest threat is the owners of these trillions of foreign dollar holdings get restless.

RegZ

dj
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