U.S. & Japan: 'eerie similarities'

[Suresh Naidu]

Do they mean fixed assets, then? I can see how private sector fixed capital 
mushroomed here, but not how this balances out the ridiculous margin that it 
was bought on. If they mean fixed assets, then people with lots of debt 
often do still hold lots of assets; enough to at least pay some of the 
interest, if they're not already bankrupt. Lots of fixed assets may be 
commensurate with lots of debt....


>From: Doug Henwood <dhenwood at panix.com>
>Reply-To: lbo-talk at lists.panix.com
>To: lbo-talk at lists.panix.com
>Subject: Re: U.S. & Japan: 'eerie similarities'
>Date: Fri, 26 Jan 2001 13:41:31 -0500
>
>The Economist wrote:
>
>>Optimists retort that private-sector balance sheets look healthy,
>>because the increase in debt has been more than matched by increased
>>assets.
>
>I've never understood this argument. First of all, one set of people
>owe, another set are owed to. People deep in debt probably don't have
>any assets, and people with lots of assets mostly have light debts.
>And second, one person's libaility is another's asset: the money I
>owe Chase on my checking account's line of credit is my debt and
>Chase's asset. Of course, assets will expand with debts - it's an
>accounting identity. And third, a lot of those assets are stocks,
>whose value can evaporate; not so debts.
>
>Doug

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