Re: ATR-72's and Airbuses

Date:         13 Dec 96 04:26:03 
From:         Chuanga@cris.com (H Andrew Chuang)
Organization: Concentric Internet Services
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In article <airliners.1996.2822@ohare.Chicago.COM> Jean-Francois Bosc (bosc@mauve.recherche.enac.fr) wrote:
> Chuanga@cris.com (H Andrew Chuang) writes:
> > In article <airliners.1996.2380@ohare.Chicago.COM> Jean-Francois Bosc (bosc@perige.eis.enac.dgac.fr) wrote:
> > > The fact is that the only governments helps allowed by the European
> > > returned Commission, and provided by governments, are loans, which
> > > _are_ being after a while.
>
> > At market rate?  Most likely not.  Then, it's a subsidy.  Also, most
> > surveys show productivity of European labor is in general less than their
> > American counterpart.
>
> Well, there was one I read a few months ago showing that labor productivity
> was higher in France than in any other country ...

Are you sure ...

> Also, all analysts I heard agree that the current low rate of the US dollar
> is a subsidy for US exporting companies, and that the normal rate should
> be around 20% higher (if I remember correctly).

All analysts?  Furthermore, if the exchange rate is so much in favor of US
exporters, why is US trade deficit still growing?

> Finally, considering that market loan rates are around 5%, even if you
> are right this doesn't leave much room for significant "subsidies".

Investors can get panic with a 0.5% change in prime rate, and you think
5% is not significant!  I'm no economist, but I know every percentage
point counts.  Just a simple illustration: after 25 years, one billion
dollars compounded monthly at 5% annual interest rate will be worth
3.48 billion dollars; compounded monthly at 10% will be 12.06 billion
dollars.  Insignificant?  I wish I could find a banker who thinks
like you do.  (I would think many of Airbus's loans were paid as lump
sums, thus, my simple example is not totally irrelevant.)

FWIW, I came across this number recently: Airbus received approximately
US$3.5b worth of loans from the participating governments for the
A330/340 program in 1987.