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Category: Foreign Investors

This category includes articles about the flow of investment from one country to another, either as portfolio investment, short-term instruments, or direct long-term investment.

Deficit spending

Foreigners shun US financial assets

Foreign flows down 99.2%

Foreign flows into US debt markets is down 99.2% from 2006 levels.

In reaction to the profligate behavior of the Pelosi-Reid Congress, foreigners have been moving from financial securities and bank deposits into direct investments and miscellaneous assets, such as real estate.

Continued deficit spending by the Obama administration should drive foreigners to seek safer, non-dollar havens.

The decline of the dollar

Will China become America’s landlord?

Pudong District, Shanghai, China

Foreigners hold $16.9 trillion in dollar financial assets, accumulated through years of selling goods and services to the US. Profligate deficit spending by the Pelosi-Reid Congress increases the probability of dollar inflation.

If foreign governments were to convert their holdings of dollar financial assets into non-financial assets, like US REITs, they can guard against dollar inflation. They might also gain a position that, in the extreme, would be against US national security interests.

World economy

Signs of US losing its groove?

The end of the American Century?

Thirty years ago, about the time the world went off the gold standard, US income from abroad was more than double the amount of income that the US paid to the rest of the world.

This surplus of investment income from abroad has been gradually diminishing. This year, or the next, this foreign income surplus may disappear forever. Does this mean that the US is ‘losing its groove’?

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Featured articles on inside pages

Stock buybacks

Accelerating to a buyback-option blowout

By Q1 2006, stock buybacks had multiplied to five times the level of 2000. Buybacks grew by 25% in 2005, with corporate profits after taxes increasing only 5.5%. At these rates, buybacks will exceed after-tax profits by 2009.
More ...

Securities Analysis

Some banks are too complex to manage

It is no secret that Citicorp no longer earns the same respect in financial circles as in days of yore. The problem is excessive complexity. This article describes the simplicity of the Citibank operation in 1956 when the bank was the world's most powerful financial institution.
More ...

US Politics

President Obama's Lincoln moment

In mid 2009, Barack Obama found that Lincoln's saying, "You can't fool all of the people all of the time," applied to his presidency. Profligate spending and unpopular health reform ended Obama's honeymoon. More ...

US equities

The productivity vs. population debate

The 'Baby Boomer Bomb' refers to the expected effect of the retirement of the Baby Boomer generation on capital markets, particularly equities. Two proposed 'solutions' to the problem are examined: Boomers being 'saved' by productivity and technology; and, alternatively, by selling their financial assets to the next generation..
More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2010-08-03 16:02