>On Sun, 3 May 1998, Yoshie Furuhashi wrote:
>
>> Dennis wrote:
>> >Wall Street's profits have fuelled a mighty foreign direct
>> >investment boom throughout the world, as well as equity bubbles in Mexico,
>> >Latin America, Thailand, Indonesia, South Korea, etc.
>>
>> A "mighty foreign direct investment boom _throughout_ the world"???
>
>Yep. Stocks are only part of the Wall Street class racket; the
>other important part is selling Government and corporate bonds to
>yield-hungry investors and institutions who -- surprise, surprise -- just
>happen to be the same folks buying up stocks. US firms sell these bonds
>and then have used the proceeds to finance real investment -- such is the
>money trail. Foreign direct investment or FDI has shot way up during the
>1990s -- not as fast, to be sure, as investment in equities or other
>financial instruments, but still pretty impressively nonetheless. The
>Singaporean economy, for example, is underwritten by US overseas
>investment; Hewlett-Packard, IBM, Seagate, etc. have all been opening up
>fabrication plants all across Asia. To be sure, the Japanese firms have
>been beating the Americans at their own game, and the corporate networks
>of Matsushita, Sony and Mitsubishi, to take only a few examples, are in no
>way inferior to US firms. Interestingly, many European firms have also
>invested heavily in SE Asia, and are now beginning to do the same thing in
>Eastern Europe.
It's my impression that both FDI and portfolio investment have been concentrated in a few areas, not spread out throughout the world. And isn't that concentration one of the causes of bubbles and subsequent crises?
Yoshie