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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

Stock buybacks and dividend equivalency

Corporations have argued that stock buybacks are equivalent to dividends. This article explains why this is not true and why suggesting buyback-dividend equivalency may constitute fraud.
More ...

Securities Analysis

Mark-to-market nonsense

Banks, by their nature, are insolvent, requiring government guarantees of their liabilities to protect against bank runs. Over the last fifty years, the percentage of bank liabilities guaranteed by the government has fallen considerably, while banks, free from the shackles of the Glass-Steagall Act, have become increasingly complex.
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

Households save more and invest in equities

Government economic stimulus programs that have sent money directly to US households have resulted in more saving and less spending. Low interest rates have encouraged individuals to move from debt instruments into equities. 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

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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Capital Flow Watch has hundreds of articles on economics and investments.

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2010-08-13 12:57