RE: Re: Re: RE: RE: Profit Rates -- From Michael Ya tes

["Davies, Daniel" <daniel.davies@xxxxxxxxxxxx>]

To be fair, although there are known serious problems with depreciation, the
WorldCom and Global Crossing affaires aren't really relevant to the
statistics Doug quoted.  The assets of WorldCom and Global Crossing are
worth exactly what they were worth before the meltdown, as stock market
movements don't mean much to cables in the ground.  The fact that the stock
market's assessment of the future excess returns to be earned from renting
out those cables no longer provide a viable basis for making interest
payments don't change the capital employed for the purpose of the BEA
numbers.

dd


>Gene, this is one of the great secrets of economics.  Of course, everyone
knows,
>as Jim mentioned, that we have no theory of depreciation, but we go on
pretending
>that out data is of good quality.

>Eugene Coyle wrote:

>> How do you adjust for the change in "capital" in telecom companies,
before and
>> after the melt-down?  What's the denominator?
>>
>> World Com
>> Global Crossing
>

--

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx



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