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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (9463)3/5/2004 7:47:19 PM
From: t4texas  Read Replies (2) of 110194
 
such a powerful article by kasriel in charts and text. i think he is correct about businesses' massive malinvestment in the late 1990s, but some of that 1990s capital investment was invested in china factories which Are getting expected returns on the invested capital. in fact i think That return on invested capital in china in the 1990s (and the WTO admission) was so compelling a return on capital to usa companies that they dismantled usa factories and built more in china -- thinking they would get more competitive on the global market. by the way i am not talking just my opinion. i watched this happen inside several usa companies. thanks for posting the link.

kasriel writes, "One last question. Why are businesses so willing to forgo investment spending so that households and governments can spend more? Could it be that the expected return on business capital is very low as a result of the massive malinvestment of the late 1990s? The answer is “yes” if 10-year Treasury TIPS yields can be viewed as a proxy for the real return on capital inasmuch as they currently are yielding only a little over 1-1/2%. What does that say about the health of the U.S. economy?"
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