PeakTrader.com

[administrator]

Chart:

http://4.bp.blogspot.com/-0-rs65ADYpk/T91GC7nNqyI/AAAAAAAAS-U/wIQNgU04XUM/s1600/bp.jpg

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PeakTrader said...

Yes, there's a huge amount of capital in the U.S. from foreign capital inflows and capital creation by U.S. firms.

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It seems, over the past four years, the federal government is destroying capital faster than U.S. firms are creating it.

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Bart says: "It does not appear to be good news...that US firms are much more owned by foreign sources."

So, for example, when investors don't want to invest in your firm, that's good news?

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If you value your firm at $1 million and a foreigner offers to buy it for $2 million, that's not good news?

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When the foreigner buys your firm that you value at $1 million for $2 million, you can start another firm.

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And foreigners may sell their assets, exchange their currencies for dollars, buy U.S. assets, and move to the U.S. to raise their standards of living.

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Why would you sell for less than it's worth, and you know it's not worth $3 million.

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End of 2010

Foreign-owned assets in the U.S. grew to $22,786.3 billion.

U.S.-owned assets abroad increased to $20,315.4 billion.

Chart of U.S. Net International Investment Position (the difference between the assets we own abroad and our assets that are owned by other countries):

http://news.recruiting.com/wp-content/uploads/2011/06/international-investment.gif

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Bart, yes, and vice versa.

However, a weaker dollar means they can raise their living standards even higher moving to the U.S., because they receive more dollars.

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Bart says: "In other words, the US is selling itself bit by bit since about 1997?"

In other words, foreigners demand U.S. assets more than the U.S. demands foreign assets.

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Many Europeans, Chinese, South Americans, etc. (and Japanese before them) are bailing-out of their countries or diversifying in the U.S..

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"We've Attracted $7.6T in Net Foreign Investment Since 1990."

And we've consumed $7.6 trillion in Net Foreign Goods & Services since 1990.

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Many foreign goods & services were sold too cheaply, to maintain foreign employment, and many dollars were lent too cheaply, to maintain U.S. demand for foreign goods & services.

Also, foreigners had to sell their goods to buy oil priced in dollars on the world market.

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Moreover, because of diminishing U.S. marginal utility in the 2000s, foreign quantities of goods & services increased faster than prices, for U.S. consumers.

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For example, when your favorite $4 box of cereal goes on sale for $2, you may buy four boxes instead of one, or spend $8 instead of $4.

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It was perfectly rational for the U.S. to overconsume and overborrow in the 2000s.

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VangelV, yes, most of the up to $800 billion a year U.S. trade imbalances should've been used for tax cuts and smaller budget deficits, or perhaps budget surpluses. Little of it should've been used for additional federal spending.

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Detailed Info of International Investment Position of U.S.:

http://www.bea.gov/scb/pdf/2011/07%20July/0711_iip.pdf

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http://www.blogger.com/comment.g?blogID=28997633&postID=8498717116862152800

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Chart:

http://4.bp.blogspot.com/-XpgH3JCJlrU/T93rXsk7OUI/AAAAAAAATBU/TR7_8JDsV_A/s1600/fdi.jpg

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PeakTrader said...

Yet, the best "country" to invest in the world is the U.S.:

End of 2010

Foreign-owned assets in the U.S. grew to $22,786.3 billion.

U.S.-owned assets abroad increased to $20,315.4 billion.

Chart of U.S. Net International Investment Position (the difference between the assets we own abroad and our assets that are owned by other countries):

http://news.recruiting.com/wp-content/uploads/2011/06/international-investment.gif

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"Over the last 22 years, Americans have invested roughly $4 trillion in foreign-based companies and foreigners have invested about $3.2 trillion in American-based companies."

And

Foreign buyers are snapping up U.S. homes
March 11, 2012

"Foreign clients bought $41 billion worth of stateside houses and apartments during the 12-month period that ended in March 2011, according to the latest tally by the National Assn. of Realtors. That's roughly the same as the previous year.

But add in the $41 billion spent by immigrants who moved here within the last two years and individuals with visas of more than six months, and the total is $82 billion worth of U.S. residential real estate taken off the market by international buyers, up from $66 billion the year before.

The demand for American real estate is so strong that last fall, the Realtors association launched an international version of its listing website.

While most states have some international buyers, the Realtors group says foreigners are buying largely in four states — Florida, California, Texas and Arizona. Of those, only Texas is not being held back by a glut of unsold inventory.

More recent data square with the association's findings. According to DataQuick, nearly 55% of all U.S. residential real estate sales to foreigners from May to November last year were in Florida, and more than 17% were in Arizona. Nearly 6% were in California, and close to 5% were in Nevada, another state hit hard by the housing downturn."

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http://www.blogger.com/comment.g?blogID=28997633&postID=6671118352920932962

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PeakTrader said...

The good news is Obama has kept inflation low (May 2012):

"The PCE price index fell 0.2% last month to mark the first pullback in more than two years.

Over the past 12 months the inflation gauge has risen 1.5%."

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Obama is giving the Fed another signal for quantitative easing (sort of like Rome burning under Nero).

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I recall when Bush (aka Claudius) saw weak economic data, he did something about it, or at least looked like he did something.

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George W. Bush:

"The economy is growing, productivity is high, trade is up, people are working. It's not as good as we'd like, but -- and to the extent that we find weakness, we'll move."

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PeakTrader said...

Obamanomics [noun]

1. Ignorance of economics; throwing as much money as possible at problems; forcing the Federal Reserve into quantitative easings; creating and maintaining a deep depression; raising taxes to pay for massive failures; taking over multi-trillion dollar industries; fast track to national bankruptcy.

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