Comments on: August International Capital Flows Turn Negative http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn.html Mon, 23 Nov 2009 11:57:17 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn.html#comment-1103 Anonymous Wed, 17 Oct 2007 13:32:00 +0000 http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn-negative/#comment-1103 Setser's comparison of the August capital outflow from the US to the height of the Argentina crisis is pretty disturbing, and undoubtedly very few people are aware of that right now.<br/><br/>A second major point that many overlook is the fact that when we talk about capital flight from the US, the issue is not merely foreigners withdrawing capital from the US---but US investors sending their own capital abroad (a la Argentina).<br/><br/>Setser's numbers imply that $91 billion in US investor capital fled overseas, compared to $69 billion being pulled out by foreign investors.<br/><br/>The potential amounts of US investor capital that could be sent overseas as a refuge (out of fear of currency devaluation) could be staggering and far exceed the amount of capital that foreigners pull out of the US. <br/><br/>The danger is especially large now compared to decades ago, due to the multiplicity of investment choices abroad now available to the public as well as real-time Internet trading. This is actually where the real monster lurks.<br/><br/>Bernard Setser’s comparison of the August capital outflow from the US to the height of the Argentina crisis is pretty disturbing, and undoubtedly very few people are aware of that right now.

A second major point that many overlook is the fact that when we talk about capital flight from the US, the issue is not merely foreigners withdrawing capital from the US—but US investors sending their own capital abroad (a la Argentina).

Setser’s numbers imply that $91 billion in US investor capital fled overseas, compared to $69 billion being pulled out by foreign investors.

The potential amounts of US investor capital that could be sent overseas as a refuge (out of fear of currency devaluation) could be staggering and far exceed the amount of capital that foreigners pull out of the US.

The danger is especially large now compared to decades ago, due to the multiplicity of investment choices abroad now available to the public as well as real-time Internet trading. This is actually where the real monster lurks.

Bernard

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn.html#comment-1095 Yves Smith Wed, 17 Oct 2007 05:48:00 +0000 http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn-negative/#comment-1095 Anon of 1:41 AM,<br/><br/>This is pretty far outside any historical experience, but consider Setser's comparison to Argentina. There may be other consequences, but the two most obvious ones would be that the dollar tanks and that the the US has to start funding some of its obligations in non-dollar currencies. The second outcome would be the result of the first. Anon of 1:41 AM,

This is pretty far outside any historical experience, but consider Setser’s comparison to Argentina. There may be other consequences, but the two most obvious ones would be that the dollar tanks and that the the US has to start funding some of its obligations in non-dollar currencies. The second outcome would be the result of the first.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn.html#comment-1094 Anonymous Wed, 17 Oct 2007 05:41:00 +0000 http://www.nakedcapitalism.com/2007/10/august-international-capital-flows-turn-negative/#comment-1094 This non-economist would love a little interpretation as to the consequences of this drop-off, should it continue. Thx. This non-economist would love a little interpretation as to the consequences of this drop-off, should it continue. Thx.

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