See you on the first tee.
Posted on 10/16/2007 10:09:52 PM PDT by bruinbirdman
Foreign investors slashed their holdings of US securities by a record amount as the credit squeeze intensified, according to the latest Treasury figures.
The Treasury International Capital report – known as the Tic – for August will be closely watched because it appears amid growing concerns about the weakness of the US dollar, which hit a record low recently against a basket of major currencies.
“The bad news is that [the data] plainly show how vulnerable the dollar is to a continuation of the credit crunch-risk averse environment,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital. “There is no way to get away from the lack of corporate bond inflows, the foreign selling of US equities and the countervailing strong US purchases of foreign equities and bonds.”
The Treasury said net sales of US market assets – including bonds, notes and equities – were $69.3bn in August after a revised inflow of $19.5bn during July. The August outflow exceeded the previous record decline of $21.2bn in March 1990.
Until now, US policymakers have appeared relatively relaxed about the dollar’s decline, since there has been little sign to date that this has been been triggered by a broader global aversion to US assets. However, that attitude could change if signs emerge in the coming months that non-US investors are becoming more nervous about holding dollar assets, as a result of the recent credit squeeze.
Some analysts said on Tuesday that the August data might turn out to be an aberration, since it occurred during the most intense period of this summer’s credit squeeze – when investors were arguably most uneasy about the market outlook. Consequently, some said they hoped that the outflows will have been reversed in September.
“There was clear panic-selling of equities in August, but given the market’s subsequent rebound, those flows should have reversed,” said Dominic Konstam, head of interest rate strategy at Credit Suisse. “If foreign investors return to buying equities, it is not obvious that there will be a capital flight from the US that will lead to a dollar crisis.”
However, others suggested that the scale of swing in August indicated that more fundamental pressures were now bubbling – not least because the dollar continued to decline in September.
The dollar was generally firmer on Tuesday after traders digested the Treasury data. The dollar index was 0.2 per cent higher at 78.25, but that is only 0.8 per cent above its record low set late last month. The dollar was up 0.3 per cent against the euro, but was 0.6 per cent lower against the yen.
Since August 1998, Tic flows have been positive and the last period of pronounced outflows was in the early 1990s when the current account deficit was briefly eliminated.
A breakdown of the data showed that one key reason for the outflows was that there were net foreign sales of US equities of $40.6bn in August, more than reversing the purchase of $21.2bn in July. Reflecting the pressure on US markets and the dollar, US residents purchased a net $34.5bn of long-term foreign securities.
In the debt world, there were net sales by foreign investors of US corporate bonds – but overall holdings of US government debt remained relatively balanced.
I say we take a vote on the definition of inflation.
All in favor of changing the subject, agreeing to disagree, say “aye”...
Aye...
“is” is two letters, “inflation” is nine, but still...
In Southern California a forty-five minute commute isn’t considered to be out of line. It’s probably more like the average.
People generally want to settle down near their employment center. The problem is, the workplace environment is fluid these days. Five to ten years later you may find yourselve out of work and having to accept a position away from home.
Then what? Move? Why, so that in another five to ten you can do it all over again?
It’s a tough situation, but it’s one many people have to deal with all the time down here.
Don’t go bezerkski on me. I do not make up the definitions for economic terms. What you are experiencing is NOT inflation. Just because you have a family does not mean you cannot, if you desire, learn a bit about economics.
If you are here JUST to express views go ahead and say we have rampant inflation. You can also express you view that when a ship is headed zero eight zero it is headed north. You would be wrong, but expressive, in both cases. If you also want to learn then learn. I come to FR to mostly learn, it is a much better source of info than MSM.
Don’t get frustrated, learn.
Come on it’s nearly Halloween and this year I’m going as ‘bezerkski the wonder dog’. :-)
Haven’t you seen the inflation figures provided in the nightly news broadcast, then used to indicate people’s purchasing power hasn’t been impacted negatively? I believe you have. All I am saying is that if inflation is going to be refereed to in this manner, then I should be able to refer to it in similar terms.
I can’t help it if the word has been morphed inappropriately.
Word History: When we say that we are going berserk, we may not realize how extreme a state this might be.
Our adjective comes from the noun berserker, or berserk, which is from the Old Norse word berserkr, “a wild warrior or champion.” Such warriors wore hides of bears, which explains the probable origin of berserkr as a compound of *bera, “bear,” and serkr, “shirt, coat.”
These berserkers became frenzied in battle, howling like animals, foaming at the mouth, and biting the edges of their iron shields. Berserker is first recorded in English in the early 19th
century, long after these wild warriors ceased to exist.
I did and the offending posts were removed.
Thanks for the comments. I do think a dose of reality is called for, but it’s my assessment that we both need to come to terms with how the word inflation has come to be used. Early on I said that you folks might be technically correct. Now I’m pointing out that the word is used differently than you envision it should be, by the media. If a word is used in a certain way, it’s meaning begins to morph, and I’m claiming that is just what has taken place.
If you don’t agree, that doesn’t change the reality of it.
So yes, you can use your ship example and I can use the current media example. We may both be right, but in simple terms, relating to inflation the way I have is reasonable.
Thanks for the response.
OK, if you prefer, hysterical. But now you are baiting me. The mods asked us to stop.
Apparently, nobody is berserk, since they don’t even exist anymore.
Regarding inflation...
According to dictionary dot com.... There are like 11 different interpretations, something for everyone I’m telling you. Nobody can be wrong, or right apparently.
Here is one of the definitions...
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.
Good.
One of my first responses was an attempt to let it go. I think your answer was “no way”.
I private replied you, and said that was “your decision”.
For me, it is over. Having read something about you, I find it remarkable how much we probably have in common, including a love of golf, and many years in a great business. And we are both republicans, you say you are handsome, have a lovely wife, and great kids.
Sounds like we have much in common, let’s both cut it out, and be friends, or at least get along. I’ll get off my high berserker horse, along with you?
LOL. I’ll go as Greenspan.
I just think it is important to learn economics and inflation is one of the important concepts. The way the government measures it is fine. But the most important thing is the delta. If we change the meaning of terms we cannot compare apples to apples. You seem to have a life dependent on oil. I have a life dependent on technology. I see my costs coming down-down-down. I also notice my cars last a lot longer. I got an amazing compressor for my farm for peanuts. My tractor as a percentage of my income is rediculously lower. I went to Sears and got amazing tee shirts and shorts for practically nothing. The cost of money is at historic lows (except for the recent bubble).
Thanks for the comments.
Greenspan? GREENSPAN?
Couldn’t resist.
Your comments about the down side of morphing words is reasoned. There’s some truth to that. Perhaps it would have been best if the media hadn’t used the word the way it has for decades. It has and that’s the simple truth of it.
Not all of us have been through economics courses. We’re going to use words in terms that we have been exposed to for a long time. That’s what I am doing and I can understand why it bothers you. It still doesn’t mean that my use of the word in these terms isn’t reasoned.
We’re kindof talking past each other here. I don’t fault you for pointing out what you know to be right, I just think you’re kindof ignoring another reality.
You take care.
I flew to SFO last week and my airfare was 300 R/T. I stayed in a Hotel for 99/night one of the Crown Plazas. I looked back to a few years ago and my average fare was about 700 dollars. My hotel was 228.
I buy the same shirts at Sears and they are five dollars and they are nice. The darn Northern Tools seems to be giving stuff I need away. I bought a good back up MIG welder for the farm for just a few hundred dollars and they tossed in a helmet and gloves. The Case dealer had 6KW generators on sale for 400.
Housing prices in my town have cratered.
I am convinced that understanding economics is interesting and helpful. Well helpful. LOL. One thing, it would increase you skepticism of the MSM.
It is crazy how some things today are so cheap, and others expensive.
I remember when Atari came out with the first really big console for tv video games. 129 bucks, that must have been like 1982. Today, the game systems typically are not far from the price. Even the separate games, about the same price. Kids bikes, are today actually much cheaper than when I was a kid, but that probably has something to do with kids hating bikes, loving video games...
And somewhere in town, you can get a decent bite to eat, for 2.99 or 3.99, just like 25 years ago.
See you on the first tee.
I don’t deny it would be helpful, and I would actually find it interesting, but I doubt it could lower my opinion of the MSM.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.