Foreign investors hit the road

The average Amnerican, and his/her friends in associated economies are
indeed victims of swindlers in the
financial industry. Other perils exist however. Take the media pundits who are now busy trying to interfere
with a corrective experience that
will put the USA on track for stability
and greater fiscal and energy independence.

The experience I refer to is the reduction of obscene consumerism,
According to all the scholars, the USA is in a severe economic crisis, because of imprudent banks, and individuals who could not repay loans for over-priced houses. Real estate inflation, then, is at the heart of the current crisis.

As the crisis gathered pace,so called experts like Ali Velshi became hysterical about the imperative of a bailout package in order to provide liquidity, that is CASH to keep the
system going. Over and over, Ali Velshi trotted out the story of Catterpillar’s ‘desperate’ pursuit of liquidity. in order to bamboozle Ammericans to support the Paulson plan.

Now, to hear Ali Velsi’s discourse with Tony Harris during the 11 a.m.CNN news program on October 16th, one would not think that liquidity/cash matters. According to Velshi, the 3 dynamics for economic health are:
(1)Rising house values, i.e.
the same real esate inflation
that contributed to the current
crisis.
(2)Pay raises if one has a job.
(3)An ever rising Dow Jones Average,
the same phenomenon that occurred
as the current mess began, and
worsened.
Mr. Velshi said nought about 3 dynamics that one would expect,
according to the tale of the crisis,as told by many experts. The missing
items in Velshi’s vision of a healthy
economy are:
(1)A rising personal savings rate.
(2)Rising value of savings accounts
through a fair interest rate on
cash savings.
(3)Job security, which should be a
much greater pschological booster
for the average person than the
Dow Jones Average and an imaginary,
insubstantial house value.
We did not hear of these 3 traditional treasures, because Velshi and company are apologists for the evil philosophy of cheap money, excessive consumerism, and real estate inflation, which threatens much of humanity with the pain of a deep recession.

Don’t you read my comments ?? The Wall Street Casino has created such an artifical investment climate over the past 10 years and alot of Europe jumped on the train…True that they are big boys and probably should have known better but lets not forget that the U.S.A. has more used car salesman than Europe…Just like that bunch of hoods that pushed all those Country Wide Mortgage Company Loans…nothing but a bunch of used car salesman and very well trained in the art of ” SWINDLE ” So now we see the demise or downfall of the financial system in the U.S.A. thanks to those greedy hoods !!!! and thanks to the politicians,those we elected to care for us honest citizens of America,that turned their backs so these hoods could roam and rape everything they could get their greedy little hands on..Europe has sence just like an animal that puts their paw in the fire…rest asure they won’t stick their paw in the fire again..AND AGAIN I SAY…GIVE THE MONEY DIRECTLY TO THE PEOPLE AND NOT TO THOSE HOODS THAT SWINDLED IT IN THE FIRST PLACE…THROW GOOD MONEY AFTER BAD MONEY…IS EVERYONE JUST PLAIN NUTS!!!!!

Essentially, we are now relying on China for U.S. debt financing, for a long time to come. In the history of $, has there ever been a case where strings are not attached to money? This is the real issue that goes beyond the financial markets.

If you consider your paycheck a vital part of your financial well being, yes you should be concerned. Americans are horrible at savings and thanks to the Japanese we’ve been able to survive this long! Game over, and as FurgalPete said, “Last one out please turn off the lights”

We need the foreign investment. What we should be asking is what has brought us to this point. A major cause has been the massive trade deficits we have been accumulating for decades. Not only have we been exporting our jobs we have been exporting our wealth, sending it to China, Japan and Saudi Arabia. Basic economics says that after this continued for a while the dollar would weaken, imports would be more expensive and our exports would be cheap to buy overseas. That would have helped to balance trade and everything would be OK. What really happened is that investors in Japan, China and Saudi Arabia took the wealth we sent them and bought up US assets.

At least these folks are still buying treasuries. If they decide to take all their investments out over a short time frame we will be looking at a major economic collapse.

There is a lot of gloom and doom out their about how the economy will be affected if the era of easy credit is over. Nevertheless, if we want to move from this crisis to a sustainable economy American consumer behavior must change. We need to do four basic things.

1) Live within our means
2) Save
3) Buy houses we can afford; and
4) Buy American

For decades we have heard that America is moving (or has moved) from a production based economy to a service based economy. THERE IS NO SUCH THING. Services are important, but you have to buy goods, equipment and supplies to provide the service, and in the end many good paying service jobs are there to support manufacturing and other production.

We have two major problems in this country. The first is the export of billions and billions of dollars to foreign countries to purchase their oil. The second is our ballooning deficit which requires borrowing billions and billions of dollars from from foreign countries. If they ever decide to stop buying our debt, or, heaven forbid, to sell our government securities, it will be “lights out” for our economy. We have got to make debt repayment a national priority before it’s too late.

A major concern? It’s a gigantic concern. The US MUST import close to 2 billion $ a day from foreign sources, (lord knows we don’t have the money locally), so if the foreigners split, we’re doomed (not that we aren’t already). Last one out, please turn off the lights. The US financial party is over.

Mike in Redwood City,

It is a reality, and a sad one it is too, that we inherently encourage foreign investors to buy our bonds anytime we dump more on the market then our own nation has an appetite for.

In other words, if we want cash to stop flowing out of this nation, we have to stop borrowing so much money.

Paul, I would say the question is not if they are going to continue to sell US stocks and bonds, but when they are going to stop being so willing to buy treasuries. That’ll be a whole new round of trouble, as we currently have way too many obligations to stop selling them.

Eighty years ago when a reporter asked Al Capone if he had money in the stock market he replied “no, those guys are a bunch of crooks”. Will foreigners continue to do business with Wall Street, not if they’re smart.

this is actually a good thing; us companies will have more freedoms to do what is the best for america.

Foreign investors will continue to sell stocks and bonds, buying treasuries in their place. We should be concerned about our outflow of dollars; they’re siphoning too much cash out of the country.

What we need to do is encourage the foreign countries to buy more products and services from us rather than bonds. This will help to dramatically narrow the trade deficit, and we can do it by enacting more sensible trade policies next year after the regime change.