>Hi Steven,
>
>Thank you very much for your very interesting "Take the Money Enron
>..." I was especially interested in the following paragraph:
>
>> Unfortunately, hundreds of companies now rely on this explosive
>> combination of private placements and off balance sheet entities. The last
>> decade has seen the American economy create a massive amount of new paper
>> financial obligations using these structures that cannot possibly be
>> supported by the productive base of the economy. In fact, little attention
>> is being paid to what is happening in this "real" economy, made up of steel
>> mills, auto assembly plants, health care services, and our physical
>> infrastructure, which turn out the products and services that a society
>> truly needs to eventually pay off all of these fictitious claims to society'
>> s wealth.
>
>
>I have a data question for you: The main source of data on debt of
>non-financial corporations (NFCB) is the Fed's Flow of Funds accounts.
>It seems to me that most of the off balance sheet debt created in the
>1990s would NOT be counted in the Fed's data for the NFCB sector, since
>the borrower in most of these cases is a financial "partner" of a NF
>corporation. At most, it would be counted in the Financial sector, whose
>debt increased roughly twice as fast as the NFCB sector in the 1990s. Or,
>in the most hidden ("off-shore") cases, it might not be counted by the Fed
>at all.
>
>If this is correct, then the Fed's data underestimates the current debt
>obligations of the NFCB sector. I wonder how significant this
>underestimation might be?
>
>Steven (and others) what do you know about this?
Another question is who the creditor is. The creditors could be US in
origin operating out of offshore accounts for purposes of tax
advantage. But I don't believe the Fed's Flow of Data allows one
track creditors working through offshore accounts back to their
nations of origin.
But a loss of foreign confidence may not be as great a threat if one
remembers that the owners of this debt are not necessarily foreign
nationals.
rb
