Posted on 03/16/2009 11:54:23 PM PDT by TigerLikesRooster
Today’s TIC data …
Posted on Monday, March 16th, 2009
By bsetser
John Jansen is right; today’s TIC January data was a disaster. $150 billion in (net) capital outflows (-148.9 billion to be precise) cannot sustain even a $40 billion trade deficit.
I also though have learned that the TIC data doesn’t necessarily match the trade deficit on a monthly basis — and on occasion it moves in ways that seem inconsistent with the market. If the big outflow had come in December (a month when the dollar slid) rather than January, the flow data and the market move would fit together. But a big outflow in January is hard to square with the dollar’s January rally.
Long-term inflows in January were weak — with net sales of long-term assets by both private and official investors. But that isn’t news. Setting December (when foreign private investors bought a bunch of US corporate bonds) aside, foreign investors haven’t been buying long-term US assets since the crisis hit.
The swing came from two sources:
1) US investors bought a bunch of foreign bonds. That is a change. US investors had been net sellers of foreign bonds and equities through out the fall.
2) Banks stopped piling into US assets. In October — at the peak of the crisis — private investors abroad bought $64 billion US t-bills and increased their dollar deposits by $196 billion (see line 29 of the TIC data; “change in banks own (net) dollar-denominated liabilities)..........
/snip
It may not be financial deglobalization, but it certainly is a major slowdown in financial globalization.
Krugman believes European economic and financial integration got ahead of European political integration. The same probably can be said of global financial integration.
(Excerpt) Read more at blogs.cfr.org ...
Ping!
It is a worrying report.
What is remarkable, and what cannot be believed to continue for a long time, is how Japan bought long term US debt at a pretty good clip. They’re now a debtor nation themselves and they now have a current account deficit.
Duhhh. Muh ah duh a wuh ahhh. With these bozos a disaster would be the best case.
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