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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

Warren Buffett attacks buyback schemes

In the 2005 Berkshire-Hathaway annual report, Warren Buffet points to the unethical aspects of the buyback-option schemes so common in the US stock market. He noted that "Too often ... the deck is stacked against investors when it comes to the CEO’s pay. ... every dime paid out in dividends reduces the value of all outstanding options"
More ...

Securities Analysis

Intrinsic value

The target of classical security analysis is 'intrinsic value', a fuzzy concept defined as the value justified by the facts. Now, there may be too many 'facts' while prices exceed 'intrinsic value'. More ...

US Politics

Why Congress won't kill ACORN

Closely connected with President Obama, the ACORN group of "community organizers" has drawn censure from the Democrat-controlled Congress as a result of investigative reporting by James O'Keefe and Hannah Giles. 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

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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2010-08-12 16:02