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Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

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  • Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

    repost, http://itulip.com/forums/showthread.php?t=11514

    sorry about that metal man................


    http://jessescrossroadscafe.blogspot.com/

    The peak of foreign capital inflows into the US was clearly seen in the second quarter of 2007, just before the crisis in the US that has rocked its banking system and driven it deeply into recession.

    Are the two events connected? Had the US become a Ponzi scheme that began to collapse when new investment began to wane, and the growth of returns could not be maintained?

    Watch the dollar and the Treasury and Agency Debt auctions for any further signs of capital flight, which is when those net inflows of foreign capital turn negative. And if for some reason the unlikely happens and it gains momentum, the dollar and bonds and stocks can all go lower in unison, and there is no place to hide except perhaps in some foreign currencies and precious metals.

    The sad truth is that US collateralized debt packages and their derivatives have become toxic in the minds of the rest of the world, and there is little being done to change that, except an orderly winding down of the bubble, with the remaining assets being divided largely by insiders, and not price discovery and capital allocation mechanisms centered by the 'invisible hand of the markets.'



    Unfortunately the Net Inflow Data is quarterly, and subject to revisions. But we have to note that the spectacularly rally off the bottom in the SP 500, not fully depicted above, is not being matched by a return of foreign capital inflows.

    If that inflow does not return, if the median wage of Americans does not increase, if the financial system is not reformed, if the economy is not brought back into balance between the service and manufacturing sectors, exports and imports, then there can be no sustained recovery in the real, productive economy.

    The rally in the US markets is based on an extreme series of New Deal for Wall Street programs from the Fed and the Treasury, monetization, and the devaluation of the dollar.
    Last edited by Camtender; August 26, 2009, 02:45 PM.

  • #2
    Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

    is not being matched by a return of foreign capital inflows.
    Doesnt need to be..

    USA taxpayer >>> USD GOVT >>> USA FED >>>> USA Banks (GS/JPM) >>> USA Stocks and commodities...>>> USA sentiment UP as stocks are up >>> USA GOVT FEEL GOOD 'saved the world'...

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    • #3
      Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

      if the economy is not brought back into balance between the service and manufacturing sectors, exports and imports
      Few people realise that "Ben" Bernanke was born Obi-Wan. Even now he is training a young jedi to fight the evil of the Wall Street Empire.


      I wish.

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      • #4
        Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

        Originally posted by SuitablyIronic View Post
        Few people realise that "Ben" Bernanke was born Obi-Wan. Even now he is training a young jedi to fight the evil of the Wall Street Empire.


        I wish.
        May the force be with you my young friend

        Comment


        • #5
          Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

          Is The Fed Enabling Foreign Central Banks To Swap Out Their Agency Debt Into Treasuries?

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          • #6
            Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets


            Mr Mack U gotta love the links at iTulip thanks for yours

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            • #7
              Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

              Is Agency Debt essentially the Freddie and Fannie Loans held by foreign governments?

              Forgive me if it's too basic a question.

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              • #8
                Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

                Originally posted by SuitablyIronic View Post
                Is Agency Debt essentially the Freddie and Fannie Loans held by foreign governments?
                yes, I think so.

                Forgive me if it's too basic a question.
                No such thing, especially with economics and the Fed.

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                • #9
                  Re: Capital Flight: A Plunge in Foreign Capital Inflows Preceded the Break in US Financial Markets

                  Originally posted by icm63 View Post
                  USA taxpayer >>> USD GOVT >>> USA FED >>>> USA Banks (GS/JPM) >>> USA Stocks and commodities...>>> USA sentiment UP as stocks are up >>> USA GOVT FEEL GOOD 'saved the world'...
                  From over here, it seems this is already history.

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