[OPE] Bernanke's Bubble Laboratory

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Fri May 23 2008 - 22:13:06 EDT


In the US, 80-90% of all companies use att least some leased equipment. The most important kinds of leased equipment are computers, office equipment, vehicles, planes, earthmoving and other heavy plant & equipment. However obviously real estate is also leased. 

The total value of leased equipment acquired during the year in the US is now said to be about one-third of the total value of newly acquired fixed assets during the year (see e.g. USDoC Capital Expenditures Survey).

Leasing is one of the fastest growing forms of capital investment globally. It is estimated by accountants that leasing now provides approximately one-eighth (12.5%) of the world's equipment financing requirements. In the U.S., the percentage is higher than the global average, totaling a third (33%) of the externally financed equipment purchased.  http://www.allbusiness.com/accounting/637055-1.html

Because (1) the taxation regime differentiates leasing (2) in national accounts the concept of value added requires clear boundaries between capital formation, consumption of fixed capital, intermediate consumption and final consumption, a considerable effort by government agencies goes into compiling statistical data about various kinds of leases of capital goods.

"The vast majority of lessees are business concerns, accounting for an estimated 94 percent of all lease transactions. Public utilities and municipal governments each account for about 2 percent of all leasing. The two basic types of lease are the finance lease and the operating lease. Generally, if ownership of the leased property transfers to the lessee at the end of the lease term, following payments that represent the full value of the property, it is a finance, or full-payout, lease; otherwise, it is an operating lease. (...) Leveraged leasing is used extensively to finance the purchase of big-ticket items such as aircraft, oil rigs, and railway equipment. It accounts for approximately 20 percent of the value of all equipment leases. Operating leases, accounting for about 15 percent of new business, are usually for much shorter terms and can sometimes be canceled at the option of lessees. Operating leases also can include maintenance and service provisions." http://findarticles.com/p/articles/mi_m3617/is_1991_Annual/ai_10859869

In the theory of rentier capitalism, leasing plays an important role. Among other things - it's a big topic - (1) leasing can help solve some of the economic problems and risks associated with investment in durable assets, (2) a strong concentration of asset ownership shuts out more than half the population from owning those assets - they can potentially only have access through leasing (3) Leasing can help to speed up the turnover-time of capital (4) Leasing does not require an open market.


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