Gilligan wrote:
Doug,

There is too much ready capital. Venture capitalists are returning investors
money because there are not enough good investments.

???

I haven't heard this one.

... There is so much
capital to invest that real rates of returns are negative (a way to reduce
excess capital).

That's not a problem of excess capital, that's a problem of excess debt
and low profitability.

... The problem is there is not much good to invest in, there's
not many creating wealth. How many donut and bagel franchises do we need?
How many more electronic gadgets do we need?

Agreed.

Let the dumb foreigners buy up the debt. They are the ones holding the risk.
If you owe the bank thousands of dollars the bank owns you. Owe the bank
tens of millions of dollars and you own the bank.They are buying debt in
currency that becomes worth less (worthless) as time goes by.


Agreed again, with the caveat that if you're addicted to the cash flow
gained by increasing debt, then "owning the bank" doesn't do you much
good when your credit rating crashes.

When the point comes that you have to jack up the interest paid to
attract new lenders (which Uncle Sam is already at) then it costs more
and more to get less and less. The only answer is to cut the deficit.

But I hope you're right that it's not too big a problem.

If the gloom and doom happens what can one do? It's best to be self
sufficient, have no debt. Living on a farm or aboard a sturdy blue water
cruiser are your best options. Make sure you have plenty of ammunition.


Learn to cultivate bean sprouts and develop a taste for long pig, maybe?



DSK