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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: geewiz who wrote (29008)	6/13/1998 2:29:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Art, I saw that i would disagree with Gene Epstein's comments " But so far, the credit assault from abroad shows few signs of bringing the kind of malinvestment that so concerned the Austrians. " excess optimism leads to excess indebtedness and "maladjustments" in the demand and output structure. We have seen the results of excess investment in SEA in the semiconductor industry and all the loans that cannot be repaid ( Japan is going to be hurt bigtime). In the U.S. we see massive trade deficits which will likely grow and overconsumption fed by debt and the wealth effect of the stock mkt bubble. Another side effect is the U.S. has the lowest savings rate in 58 years. Who needs to save when the mkt returns 20-30% a year. The low savings rate means higher consumption than would otherwise be the case in a balanced economy. Companies have become more concerned with rising share prices than investing in capital goods ( see our low productvity growth of less than 1% annaully). Companies prefer mergers and acquisitions and accounting gimmickery to achieve higher stock prices. Mike