> From: Doug Henwood <dhenwood at panix.com>
> As Goldman pointed out in its analysis of the thesis, if you use that
> constant capitalization rate, then the stock values are implausibly
> volatile.
This is true; I think it's pretty silly to try to put a number on the dark matter (if it wasn't very difficult indeed to know what US overseas investments are worth, the matter wouldn't be dark!)
>
> Also: if it's a return to imperialism, then "dark matter" is a pretty
> misleading term.
That's capitalism (or as we call it "the market system") for you.
> But just how does the US role as imperial hegemon
> increase FDI returns?
The sketch argument I would give is:
1) US residents have enjoyed more domestic stability during the period of US hegemony than the world as a whole. 2) Because of 1), they have been able to accumulate more 3) Because of 2), they have generated a surplus which it has been possible to invest overseas. 4) Because of the above, their overseas capital is of an older vintage than the assets of foreigners in the USA 5) Older capital assets in general have higher returns than newer ones because there are fewer teething problems and because statisticians tend to structurally over-depreciate. 6) Therefore, the fact that the USA has used its position of global hegemony to maintain the stability of US interests over the last short hundred years, is part of the explanation of why US FDI overseas earns more than foreign investment in the USA.
Added to this, the history of foreign investment (portfolio and FDI) in the USA includes several very large malinvestments indeed, like Vivendi's purchase of Universal, Japanese real estate speculation and so on. These aren't really anything to do with hegemony but they are potentially material relative to the total.
> And it's kind of absurd to apply this kind of
> analysis to debts, which have fixed interest payments. US net
> foreign
> debt is approaching 25% of GDP. Surely that can't be wished away.
I would say "imprudent" rather than "absurd". It's true that all it takes is a few bad events and the "dark matter" can go poof like the NASDAQ bubble (mainly because it's made of the same stuff ie discounted cashflows). But the overseas earnings of American companies and investors are real money which is an important part of the capital account.
best dd
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