Re: Peter Garber, trade deficits, & bubbles

[Doug Henwood <dhenwood@xxxxxxxxx>]

Daniel Davies wrote:

> The idea is that the USA is indulging in financial intermediation on a grand
> scale; it borrows capital from Asia, invests it across the world, and picks
> up the spread between the borrowing rate and the rate of return on
> investments as a profit.

Except that in the latest BoP release, our balance on investment
income has gone close to 0 - $2.6b in 04Q2, down from $12.2b in 04Q1.
You can have a positive rate of return spread, but if the stocks keep
going against you, you'll end up in the hole anyway.

Doug