[lbo-talk] rentier punishment of invesment.

Robert Wrubel bobwrubel at yahoo.com
Sun Sep 16 06:10:16 PDT 2007


--- Marvin Gandall <marvgandall at videotron.ca> wrote:

"Isn't US capital (and the Fed) faced with a conundrum of sorts: If the dollar is pushed lower in a bid to redress the current account balance, consumers will be squeezed and US exporters will be more competitive in foreign markets, but won't US firms also be more vulnerable to foreign takeover?"

Pardon my naivete, but what is the connection between the valuation of the dollar and interest rates? I thought that the urgent problem of the moment was to keep interest rates high enough that China and Japan wouldn't stop buying US Treasuries, and I thought that would also keep the dollar higher.

As for "consumer squeeze", I thought that ranked low among official concerns. Certainly the price of oil did not produce any great popular outcry.

BobW


> Doug wrote:
>
> > Rakesh, did you read Bernanke's latest on the
> savings glut? He says
> > the U.S. has to invest more and reindustrialize to
> help get the c/a
> > back into balance. He gave the speech at a
> Bundesbank conference when
> > Wall Street expected him to talk about the
> subprime crisis and the
> > credit crunch. Instead, he took a long-term
> perspective. I think his
> > tacit message was a little slowdown would be a
> good thing, so don't
> > expect a quick bailout. The markets didn't pay
> much attention though.
> ===========================
> Isn't US capital (and the Fed) faced with a
> conundrum of sorts: If the
> dollar is pushed lower in a bid to redress the
> current account balance,
> consumers will be squeezed and US exporters will be
> more competitive in
> foreign markets, but won't US firms also be more
> vulnerable to foreign
> takeover? Or does the Fed a) not really care about
> who does the investing so
> long as it happens and the US manufacturing base
> expands or b) expect higher
> domestic savings to provide the new investment and
> offset US reliance on
> foreign capital? Both in tandem, I guess.
>
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>
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>



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