Mario Goveia wrote:
> Even Mervyn Lobo has now confirmed that the 5.1% he
> had mentioned was a rate used by non-US lenders when
> making loans to American businesses, which would be a
> hurdle rate that is always higher than the inflation
> rate by an amount that reflects the lender's perceived
> risk in the investment. BTW, we MBAs learn this stuff
> in Finance-101:-))
Mario,
I have tried to make this as clear as I can, the 5.1% rate used, once again, is
the privately calculated US inflation rate. No one trusts US govt numbers
anymore. This is not difficult to understand, it is only difficult to accept.
If you want, you can call the rate any name that is acceptable to you ;-) The
name is of no concern to me.
All I am concerned about is using this rate to make money. Personally, I think
that the US inflation rate is much higher than 5.1%. The market seems to think
the same way too as evidenced by this years depreciation of the US dollar. The
good folks at OPEC, the ones that have money coming out of their ears, now want
to sell their oil in currencies other than the US dollar. They too have started
to realize the rate the US dollar is falling in value.
Mervyn3.0
PS. This is my last comment on this topic. Only you and Bibi Bhandari out of
14,000 people here have not understood my point. I can live peacefully with
that success rate.
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