Foreign holdings of U.S. securities rose to a record $18.4 trillion as of the end of June, according to preliminary data released by Treasury.
An annual survey of foreign portfolio investments -- including U.S. stocks along with short-and long-term debt -- showed holdings rose by 8 percent, up from $17.1 trillion a year earlier, the department said in a statement on its website. Japan was largest investing country with $2 trillion, followed by the Cayman Islands at $1.7 trillion and the U.K. and China at about $1.5 trillion each. Luxembourg rounded out the top five at $1.4 trillion.
Foreign holdings of U.S. equities climbed to $7.2 trillion as of June 30, from $6.2 trillion a year earlier. Short-term debt holdings increased to $954 billion from $909 billion, while long-term debt holdings rose to $10.3 trillion from $10 trillion, the data showe
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WNU Editor: Heaven help the U.S. (and the world) if one day the decision is made to pull out of the U.S., and/or the U.S. decides to not permit these funds to leave the U.S..
Well, the risk is zero.
ReplyDelete18 trillion.. that's just one year of GDP output, the U.S. is just a massive beast and can afford it, it could even at today's output afford 30-50 trillion.
ReplyDeleteA little thing called debt trading will surface, again, where countries that hold US debt and are unable to redeem it will trade with allies of the US who will have better options, for debt of other less risking nations and/or value given. Not a new process at all. Would it be worth the isolation?
ReplyDeleteI'd personally like Trump to tell China that since they have ripped us off stealing our IP, we are going to write off billions in debt. Ok.... wishful thinking.
ReplyDeleteA record 18 trillion foreigners holding our securities which mean stocks as well as debt, wow!! On the one hand, people consider us a good investment!! This is great!! This is an honor to be so well thought of that people would invest in us!! So much for the theory that US is on the cusp of total failure that some have been predicting for decades. Based upon how people outside of the US appear to be investing their money this would seem to not be the case. Smart investors and foreigners with money to invest are generally very smart would generally not invest in that which is on the cusp of failure.
ReplyDeleteFurthermore the record happened under the Trump Administration. Such actions would appear to indicate approval of the presidential administration on the part of foreign investors.
While I would not say the risk is "zero" as was suggested, investors appear to have confidence in it or they wouldn't have risen their investments to a "record." If the risk is "zero," this means no rate of return. In this case, they don't invest and their funds just "stay on the sidelines" to use a term that has often been used.
On the other hand, foreigners don't always have our interest at heart. As such, is it wise to have a situation where foreigners have so much control over valuable assets. After all part of the reason people invest is to gain control over things. Is it wise to have a situation where foreigners have such control?
"Would it be worth the isolation?" While I am not sure what that actually means, the US might want to maintain some type of control over its valuable assets. Having foreigners own much of it through investments in the various securities such as stocks and debt could put us in a bad spot. As such, limiting how much can actually leave the country at any time might be a good idea to maintain some type of control over our assets, our economy, and our national sovereignty. We would expect certain foreigners holding the investments to respond in negative ways possibly leading to "isolation" on the part of the US. As such, is it worth the isolation might be a good question for US leaders to ask.
As stated though, to have others being willing to invest in us is a huge honor!! We should endeavor to perform well for ourselves and for those who have invested in us. Obviously they would not invest in us if they did not believe we had value to offer!!