>On Mon, 24 May 1999, Doug Henwood wrote:
>
>> As of the end of 1998, foreign financial claims on the U.S. were $5.4
>> trillion, while U.S. claims on foreigners were $2.7 trillion, for a net
>> balance of -$2.7 trillion. That's deteriorated by about $1 trillion since
>> 1996. About half of that has gone into Treasury bonds, and a quarter into
>> corporate bonds. This gusher of foreign money has kept the real and the
>> financial circulations circulating wildly.
>
>Whoa, I thought the Fed's Z1 flow-of-funds figures listed net claims
>at $1.9 trillion or so. Which line items do you add, I assume it's
>the L51 plus corporate bonds? Or are total financial claims different from
>the concept of net international investment position?
I'm using the "Rest of the World" tables from the flow of funds (L107), assets (L1) less liabilities (L23). (This table is done from the foreign point of view, so a claim on a U.S. entity counts as an asset.) It includes direct investment, valued at current costs. Foreign holdings of U.S. stocks count as an asset, but U.S. holdings of foreign stocks don't count as a liability. (From a stockholders point of view, it's an asset, but from the issuing corporation's point of view it's not a liability, since stockholders have no fixed claim on corporate profits or assets.) If you add in U.S. holdings of foreign stocks, then the picture looks slightly less bad - a mere $1.5 trillion hole.
>The reason I ask is that I always give a graph of the latter to my class
>(it's a Comparative Literature class, but what the hell, and wasn't it
>Wallace Stevens who said money is a kind of poetry?). They're generally
>mightily impressed by such statistics, which confirm exactly what they see
>around them -- a society in the throes of severe decay and unrelenting
>class polarization.
No. America is mighty, a model for the world. You keep forgetting, Dennis!
Doug