In a message dated 5/15/2006 6:01:17 P.M. Eastern Daylight Time, [EMAIL PROTECTED] writes: Yes, but the cost of foreign borrowing is that there are interest payments that must be made to folks outside the country. That means that the country has to produce more than people in the country receive in income, just to pay interest.
Is it the "average" USer who's "binging"? or is it those who are credit-worthy, i.e., the middle class and above? > Bernanke sees this statistics now as proof of the global superiority of > Amer-assests in attracting foreign capital flows. how long will that last? <>><><>><><><><><><><><><><><><><><><><><><><><><><><><><>< As to the first point it is not quite true what you say. If you examine the US Net Financial Position for 2004, ie, the net investment income balance (the difference between what the US pays and what it receives from the rest of the world) it is still positive ~ 30 billion!. On the other hand, by virtue of the dollar being the global reserve currency , the US receive seignorage gains.If you look at the US Capital Account you can also see the US from net capital gains. As to whom benefits, I think indeed the US working class benefits quite a bit from the low cost of imports and low finance, even at low income levels. This is probably why Republicans keep getting elected back to the White House and the Congress. It is important also to notice the huge advances of the financial system since the 1980's so that it can now not only offer credit to low income households but also its ability to fijnancialize just about anything and , for example, to package this low quality debt in the form of credit derivatives and resale it in the global financial markets which are happy to gobble it up, helping the stability of the system. How long will it last? This is always the million dollar question. Who knows, nothing lasts for ever. But on the other hand it is easy to tell that it won't end too soon because the parties involves all benefit from the system. It is important to keep in mind that just because financial accounts show a deficit here and there, they do not signify that a big change is coming up, because: 1 the books might be hiding gains not shown in the accounts 2_the powers that write the books can easily rewrite them 3- financial ratios do not change the world: people do. Cristobal Senior De Ruiz Cristobal Seniot