> What's the state of thinking these days on the monetary transmission
> mechanism? Lately in the U.S. it seems to operate via effects on the
> stock market, the housing market, and psychololgy. Investment hasn't
> responded to the lowest interest rates in a generation.
There's too much world wide manufacturing and transportation capacity, such that much of it is operating at a loss. That's Jack Welch's thinking, for instance, and he has been responsible for assessing and deciding among investments on the basis of NPV and IRR for at least three decades.
After two more rate cuts, we'll have the opportunity for a dollar carry trade, vis-a-vis the euro, similar to the yen carry trade the dollar enjoyed in the 1990's.
Chris