[lbo-talk] foreigners losing will to fund US?

[Mark S]

>Wall Street Journal - May 17, 2005
>
>U.S. Bond, Stock Purchases
>By Foreigners Drop Sharply
>
>By CAMPION WALSH and AGNES T. CRANE
>DOW JONES NEWSWIRES
>
>Buying of U.S. bonds and stocks by foreigners fell sharply in March, 
>suggesting the country may be having a harder time financing its trade 
>deficit with money borrowed abroad.
>
I suspect that the closing of the current account deficit is as likely as 
the Revolution.  The growth in U.S. dollar transactions outside the U.S. 
continues.  Also, the private sector share of the current account deficits 
over 2003 and 2004 was 59%.  Foreign demand for greenbacks is still growing, 
whether it be in the form of dollar deposits or T-bills.  I bet that much of 
the proceeds from redeemed T-bills stays off shore for medium-of-exchange 
purposes between private entities.

Also, the relationship between the movement in the current account balance 
and floating exchange rate movements is random.  A person will have a tough 
job proving that the CA balance causes movements in the exchange rate.

M.

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