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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: t4texas who wrote (9536)	3/5/2004 8:10:38 PM
From: mishedlo	Respond to of 110194

Interesting snip from Northern Trust weekly commentary. My comments follow: In sum, U.S. businesses, along with the rest of the world, are saving so that U.S. households can spend more on SUVs and McMansions and U.S. government units can spend more on whatever governments spend on. That’s terrific for now. But will these SUVs, McMansions, and government spending programs allow us to grow faster in the future? If not, will we not have to suffer more of a decline in our future (or our children’s future) standard of living when we have to service our foreign debt, or maybe even have to pay down some principal? 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? northerntrust.com ======================================================= What it SCREAMS is OVERCAPACITY! Investment is NOT needed. There is OVER-Investment. We do NOT need more stuff. In short DEFLATION! Mish