Al:
<< know that we already agreed to disagree on the loan guaranteeing issue. But, to help me to understand more of your view, could you
please characterize it as a necessary or suffifient or both for capital to return to Asia?>>
The international debt guarantee exists, de facto, whether or not you like it. Observe Mexico and now Korea, Indonesia and so on. The cost of capital in these countries has gone up; the spread over Treasury is the debt insurance premium, which is being paid ex post.
A formal international debt insurance program will make countries and companies borrowing in the global market pay ex ante a premium to be accumulated as an insurance fund (like the US Deposit Ins Fund) to pay for problem loans -- it is supposed to be actuarially fair and to monitor all foreign debt of a participating country. This scheme is intended to replace the ad hoc system that throws global economies to a chaos, at least temporarily, due to currency runs, which happened in Europe, Mexico and now SE Asia.
<< Do you have figures on US exports to Asia regarding how much is classified as capital goods and how much as consuming goods?>> I do not know this and would like to hear from others.
Sankar |
