[lbo-talk] Dark matter in the current account

[Daniel Davies]

I don't agree that the Haussman etc "dark matter" thesis is necessarily
lunatic.  If you believe that there are rents earned by the USA as a result of
its role as hegemon, then it is not obviously a loony thing to do to capitalise
the value of those rents and treat it as an asset to set against the debt on
the other side.  If you don't do this, then you are bound to continually be
surprised when the "net income from overseas" line is always much higher than
you would otherwise expect it to be.

I'm not sure I agree with the specific capitalisation rate used (assuming a 5%
return on overseas FDI looks innocuous, but it's equivalent to a 20x PE ratio),
and it is a big weakness of this thesis that it's a theory of the US current
account deficit that doesn't work even a little bit as a theory of the UK and
Australia.  But the basic idea is sane and is probably part of the explanation.

best
dd

		
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