Chris, >But the chart accompanying the Forbes article shows the really big >expansion in inward flow of finance is into US treasury bonds, and to a >lesser extent, into US corporate bonds. To a lesser extent indeed. the US corporate bonds have not done nearly as well as the governmental one. The US long-term tresuries have done quite well this year, considering Greenspan's rate hikes. >This suggest a hypothesis that a slowing of the US economy might not burst >the bubble, so long as other economies slowed more, or at a comparable >rate. Why? Because then US interest rates would still be relatively high and that would be good for the dollar? But how do you go from the movement of speculative money to that? >Or is there some subtlety about why overseas fundholders prefer to put >their money in US corporate bonds than in US equity? Fundholders are a mystery made (nearly) human, but there's one huge difference between bonds and equity: Bonds (at least the secure ones, not the junk) generally do well in times of crisis because normally interest rates go down in that context. Low interest rates are also good for stocks, but their value is also affected by the crisis. As I understand it, the US treasuries market is also extremely liquid which is an advantage for the ones who like to move lots of money around quickly. But maybe you are asking about the difference in risk between corporate bonds (which are not doing very well anyway) and corporate equity. Then the subtelty is that bondholders are paid before stockholders in a bankruptcy. I also guess that lots of stock is held by brokers, insiders, etc. as opposed to the general public (this could affect the percentage of foreign ownership). >From Forbes: >Capital inflows from abroad match the excess >of imports over exports. But the current account deficit is a lot higher than the trade deficit. Am I missing something on the technical side? Or are they not looking at the data? >"Interest rates have been lower because foreigners have seen the dollar as >a store of value," Bernstein says. And also because there has been crisis in the world an in the US itself to which the monetary authorities have reacted. _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
