 |
||||||
| Friday, November 20, 2009 |
Contact Us
|
 RSS
|
|||||
|
|
| |
|||
|
||||||
|
||||||
|
|
ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
|
|
|
|
January 21, 2009 4:04 PM ET
The downward trend in foreign investment in long-term U.S. assets shows no sign of ending, a leading trade economist warned today. And while some experts say such a development is part of a necessary fiscal “rebalancing” that reflects the unsustainable U.S. trade deficit, the ultimate outcome could be inflation—if the federal budget deficit isn’t also eventually curbed. 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 Foreign Relations, wrote today on his website, “Follow the Money.” Such a trend raises concerns that the growing U.S. budget and trade deficit will no longer be financed from abroad, as foreign governments and private investors turn inward. Granted, the trend away from long-term U.S. assets is currently being offset by foreign purchases of short-term Treasuries. But Mr. Setser noted that such a phenomenon is unsustainable, because central banks’ foreign reserves are falling. Eventually, he said, “the overwhelming majority of the deficit will be financed domestically, as the rise in the deficit offsets a fall in private consumption and investment.” The concomitant increase in new issuance of Treasuries could cause long-term interest rates to rise. While some economists say such a development will be necessary to head off inflation once the economy recovers, some doubt such a scenario is politically feasible, and that inflation will thus become an immediate concern once deflation ceases to be. “The Fed will be under pressure to keep the cost of funding that debt low,” David Wyss, chief economist of Standard & Poor’s told Financial Week. He noted that the Obama administration’s stimulus plans call for the start of a lot of new programs. “There’s nothing more permanent than a temporary government program.”
|
|
|
|
CRAIN'S BENEFITS OUTLOOK 2009
SPECIAL REPORT
MOST POPULAR
|
MORE ANALYSIS
Crain Financial Group:
InvestmentNews |
Pensions & Investments |
Workforce Management
Copyright ©2009 Crain Communications Inc
All rights reserved.
Privacy Policy |
Terms & Conditions