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Foreign Capital Is Doing More Ebbing Than Flowing


Economic Trends

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."GENE KORETZ


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