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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: AC Flyer who wrote (12950)1/7/2002 6:23:54 PM
From: Mike M2  Read Replies (2) | Respond to of 74559
 
AC,why does it seem difficult to imagine that over investment in some areas and overconsumption can lead to underinvestment in other areas? mike



To: AC Flyer who wrote (12950)1/7/2002 6:30:23 PM
From: Don Lloyd  Read Replies (1) | Respond to of 74559
 
AC -

The problem is that capital is not homogeneous. Capital investment in one area incurs the opportunity cost of not being available for investment in another area. This is especially true if the actual investment in physical capital goods has already been made at the point where it is seen to have been a mistake. Once you have an extra chip plant, liquidation is only able to recover pennies on the dollar to re-invest in an alternate investment, buying a politician, for example. -g-

Regards, Don



To: AC Flyer who wrote (12950)1/7/2002 8:25:48 PM
From: Moominoid  Respond to of 74559
 
Obviously those are different. One is liquid cash and the other is physical stuff bought with that cash. If no-one wants the latter then it can't be converted back into cash. But the debt that was used to buy it is still around....


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