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Foreign buyers no longer binging on long-term U.S. debt
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by Amy Judd | January 21, 2009 at 04:27 pm
179 views | 9 Recommendations | 1 comment
The lack of foreign investment in long-term US assets is not going to go up anytime soon according to a leading trade economist.
Some experts say that this is a necessary part of the 'rebalancing' of an economy on the downward trend as the US trade deficit is unsustainable, but the outcome could be inflation for everyone. This all hangs on the federal budget deficit.
The warning about foreign investment was based on the latest data from the Treasury Department’s International Capital System (TIC).
The TIC showed that foreign investment in long-term Treasury bonds and U.S. corporate debt and equity fell by another $56 billion in November following a $37 billion decline the month before.
“The latest TIC data provides yet more evidence that financial globalization—the rise in cross-border flows—has peaked,” Brad Setser, a fellow in geonomics at the Council on Financial Relations, wrote today on his website, “Follow the Money.”
This is such a concern because it means the US budget will no longer be financed from overseas investors.
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at 23:25 on January 31st, 2009
Yes, the real estate boom (inflation) peaked in August 07, and investors 'in the know' realize that it will take about 4 years from then before the market hits bottom (deflation), at which time they will buy again! and inflation will begin again for the next 18 year real estate boom/bust cycle, with 14 years up and 4 years down. (Bottoms have been known to take more than 4 years to eventuate - so the next inflation starts then.)
So, investors will hold off now, until they can buy cheap in about 2 to 3 or 4 years, causing a new round of inflation, which will peak around 2026, which is when they will sell, just before deflation begins again - and we will see a repeat of bail outs, –privatizing profits and socializing debts. The rich get richer and the poor get poorer, that is how it is done.
Only, next time, the market will be HUGE because China, India and Russia will have enclosed their commons, and their investors will reap fortunes on THEIR new real estate market. Find about how this all started in the good old USA, in Phil Anderson's new book "The Secret Life of Real Estate" - out in UK now, and in USA in March.
And, for a detailed explanation, read this related post on NowPublic: