http://www.chrismartenson.com/blog/funding-nightmare-us/15148I've read and reread this posting. I cannot tell you how much insite this post, along with all it's comments. This article talks about the TIC report just released (Treasury International Capital). This report summarizes international movement of money into and out of the country, from foreign investors. It looks very bad when you consider all the large bailouts and stimulus going on.. how on earth will we pay it with a major recession domestically, and a trend of foreign investors stopping their investments in the US?
The most recent TIC report for January 2009 is nothing short of a disaster for US borrowing plans and indicates that some very interesting times are dead ahead. Here's the latest report, with my comments in bold:
Washington —The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for January 2009. The next release, which will report on data for February 2009, is scheduled for April 15, 2009.
Net foreign purchases of long-term securities were negative $43.0 billion. This means that foreigners were selling both long dated bonds and equities.
Net foreign purchases of long-term U.S. securities were negative $18.8 billion. Of this, net purchases by private foreign investors were negative $10.2 billion, and net purchases by foreign official institutions were negative $8.5 billion.
U.S. residents purchased a net $24.2 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been negative $60.9 billion. Wow! This is by far the most negative reading for this number that I can find in the data series. This means that foreigners, rather than investing in the US, have been taking their money home in a big way.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $30.9 billion. Foreign holdings of Treasury bills decreased $15.4 billion. This one is a stunner. See the image below for further clarification. This says that foreigners have been net sellers of Treasury bills. This is simply the most unusual data point I can imagine considering that every US auction of Treasury bills in January were "over subscribed." Now I am wondering just where the domestic demand for all that buying came from?
Banks’ own net dollar-denominated liabilities to foreign residents decreased $118.9 billion. I think this means foreigners closing out bank accounts and taking the money home, but I am not entirely sure. I'll have to look into how this number is derived.
Monthly net TIC flows were negative $148.9 billion. Of this, net foreign private flows were negative $158.1 billion, and net foreign official flows were $9.2 billion. This reveals that where private parties were pulling money out of the US, foreign central banks ("official flows") were still propping up the US financial markets. For how much longer, one wonders?
Consider there are only 3 ways to finance government spending: Taxation, Borrowing, and Printing. Taxation is going up, which will hurt the economy further, lessening it's value. Borrow appears to be drying up. Printing is all that is left.
In the comments below, were some comments regarding this as a mere statistical anomoly or whether there was some trend going on here. Well, the answer is, it appears to be a trend, at least at first glance.
http://forex.fxdd.com/21756/economic-statistics/us-tic-data-for-january-is-released
In another post, someone mentioned the upcoming ARM reset wave. There has been some talk on this, someone tracked it down. It appears that there will be a wave of ARM resets beginning in April, then slowly building momentum until September 2012. In otherwords... we have only just begun on the housing market collapse.
http://activerain.com/blogsview/202178/Adjustable-Rate-Mortgage-Reset-Schedule-GRAPH
