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Back to Mercantilism
Posted by Ronald Fink | CFO.com | US
March 22, 2005 4:17 PM ET
I just attended a conference where J.P. Morgan Chase bankers made a bold prediction about the impact of a law Congress passed last October.

The bill, which would provide a one-time reduction in the tax rate on foreign earnings that companies repatriate, would bring back to the U.S. an estimated $350 billion in earnings, according to the J.P. Morgan bankers. And because companies must use the money for activities unrelated to executive compensation, dividend payments, or share repurchases, the bankers expect it to increase direct investment and capital spending in the U.S. by 4 percent, most of it by manufacturers and pharmaceutical companies. The bankers says that will translate into anywhere from .75 percent and 1 percent of additional GDP growth, and 600,000 new jobs over the next year.

Could the inflow go some distance toward strengthening the dollar and reducing the current account deficit? The Fed is expected to weigh in on those issues in a report due out in about two weeks. Who says the U.S. doesn’t have an industrial policy?

Comments (2)


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Ron--I'm expecting a follow-on post to this, since I assume the real reason you went was to buttonhole Don Nicolaisen. What about it? Any more comments from the SEC's Chief Accountant about the use of the direct method for cash flow statements? The topic came up at CFO Rising.
Posted by CFO Staff: Tim Reason | March 22, 2005 02:07pm

Sorry, but I had to skip the luncheon. I had an appointment with (beat) our accountant.
Posted by CFO Staff: Ronald Fink | March 22, 2005 04:51pm

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