Foreign Capital Is Doing More Ebbing Than Flowing

Alan Lerner isn't alone in asserting the economy is undergoing a credit squeeze. Economic consultant Sam Na-kagama points to a sharp slowdown in the nation's net inflow of foreign capital -- from $166.9 billion in 1987 to an actual outflow at a $52.3 billion annual rate in the first half of this year. The main cause, he says, has been a massive reversal in Japan's and Germany's capital flows, from a combined outflow of $80 billion in 1990 to an inflow at a $19.4 billion pace this year. In this situation, says Nakagama, "tax cuts that lead to rising deficits may be of little avail."

Before it's here, it's on the Bloomberg Terminal. LEARN MORE