Posted on 07/04/2003 7:38:05 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
WASHINGTON, June 30 (Reuters) - The shortfall between U.S.-owned investments abroad and foreign investments here widened again in 2002, to a record $2.387 trillion, the government said in a report Monday.
In its annual report on the nation's international investment position, the Commerce Department said the gap between U.S. and foreign investments had increased by $407.31 billion from a revised $1.980 trillion seen in 2001.
Since 1985, the United States has been a net debtor country, meaning its financial claims and assets in the rest of the world are outweighed by foreigners' investments here.
Commerce said the larger gap in 2002 was due to large purchases of American corporate and government debt by foreigners, a shift by U.S. investors to being net sellers of foreign securities from net buyers and large stock market price drops that decreased the value of U.S.-held assets overseas.
The report underscores the United States' reliance on foreign investment for capital. On June 19, the Commerce Department reported the U.S. current account deficit, the widest measure of trade and investment flows, posted a record $136.11 billion in the first three months of the year.
The annual investment position report's numbers are based on estimates of how much it would cost to replace plants, equipment and other tangible assets currently. Using a different valuation method, based on the market values of the assets, the gap was larger, $2.605 trillion in 2002, up from $2.314 trillion in 2001.
The report showed more evidence that the lure of U.S. assets dimmed for investors abroad in 2002. Foreign direct investment in the United States fell to $706.98 billion, down from more than $765 billion in 2001, the report said.
"Foreign direct investment in the United States slowed substantially to the lowest level since 1992, as a result of a further drop off in foreign acquisitions of U.S. companies and reductions in a debt owed by affiliates to their foreign parents," Commerce said.
Foreign official assets, which includes U.S. assets held by foreign governments or central banks, increased by $105.34 billion to $1.133 trillion, the biggest gain since 1996, Commerce said. Net buys of U.S. Treasury securities were up sharply and helped by those securities' price appreciation, Commerce said.
Foreign nations use the cash obtained from our Trade Defict to purchase U.S. Treasury bills issued to finance our budget deficit and National Debt.
For FY 2002, interest paid on the National Debt was $332 billion, or roughly 18% of federal revenue for that year. For the first 7 months of FY 2003, the Treasury has already spent over $174 billion in interest expense.
"Think what you do when you run into debt;
you give another power over your liberty."
-- Benjamin Franklin (1706 - 1790)
You cannot go on spending more than you have(domestically and internationally) forever. Sooner or later, all debts will be called, and I dont believe that the United States will be able to pay up.
No bid deal, lots of countries have went bankrupt, and became insolvent, and those who have gold will not be affected at all by the devaluating of the dollar.
As long as Nafta is still around, even after bankruptcy, we will still be able to get all of our manufactured goods from china, our food from brazil, and whatever else from mexico.
The entire world financial (Bank) system is due to be overhauled; the global currencies, aka the Euro and soon the America's Dollar will attempt to consolidate aging societies and manfacturing empires with the new socieites with youthful populations and undeveloped economies. It is surmised that the Industrialized countries can maintain power by offering education and stability to these newer countries (within a context of democracy) and at the same time incorporate another 50-year cycle into the current power structure of world politics.
I'm not a Brazilian. I'm an American.
And you're nothing but a double-talking conartist peddling snake-oil.
I'm not buying. Scat.
If you lived in Brazil and needed to invest your money where would you invest it? The rich in most countries of the world would rather give Americans their money because they know we will give it back with interest. All the while we get great roads, water and electricty to almost every home and a life style that allows even the poorest people in the country to live well. The glass is half full.
Where would I invest my money? Like a credit card company, I would extend the United States just enough money that they would effectively enslave themselves to me, paying me the maximum possible interest but not so much that they could not make the payments. I would do so until they had had to sell off so much of their wealth that other countries presented a better opportunity. Or I might do so just until I needed the funds to pay for my own retiring Boomer generation (the Baby Boom is a worldwide phenomena). In any case, foreign investors will invest in us just as long as we present an opportunity for them. They do not live and work for the sheer pleasure of increasing our living standard. THOSE are the cards that we hold.
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