February 7, 2008

YOU DON'T INVEST IN A NATION WITHOUT A FUTURE:

Foreign investors are retreating from Japan (Peter Alford, February 08, 2008, The Australian)

THE Japanese share market is suffering its worst sustained outflow of foreign capital - an average of Y240.1 billion ($2.5 billion) a week in the past three months - since recovery began six years ago.

Since the "real" economy seems to be also drifting closer to the edge of recession than at any other time in the past six years, this is not a happy coincidence.


As demographics drive the decline of the secular world, American debt is only going to become more vital to the world economy. The world literally can not afford for the US to run a balanced budget.

Posted by Orrin Judd at February 7, 2008 8:52 AM
Comments

OJ, while it is true that the US is enjoying a higher rate of births and migration than other economic powers, why couldn't bonds from the European Central Bank and the Bank of England serve a similar function that US Treasury bonds perform? If social and political stability form the basis of a secure investment, surely the UK and Australia can easily match what the US offers.

Posted by: Brad S at February 7, 2008 9:44 AM

I get so confused. My betters are always telling me that foreign inward investment is a bad thing because it threatens are sovereignty and our economy. So isn't this good news for Japan?

Posted by: Ibid at February 7, 2008 11:31 AM

Brad S.:

The US pension obligation (Social Security) is a problem, but clearly managable. The European one is not a dead-lock disaster but is nonetheless rather more alarming. I'm also not sure their economies are big enough to support bond sales on that scale...

Posted by: Mike Earl at February 7, 2008 11:50 AM

Brad S.:

The US pension obligation (Social Security) is a problem, but clearly managable. The European one is not a dead-lock disaster but is nonetheless rather more alarming.

Posted by: Mike Earl at February 7, 2008 11:50 AM

Brad:

The bad money (printed to keep the coupon stream flowing) would drive out the good pretty quickly.

Plus, the ECB is wobbling too much - it's a 15-legged horse now, with about 10 or 11 of them shrinking daily.

Posted by: jim hamlen at February 7, 2008 4:35 PM

England could if it renounced the EU and reclaimed control of its own economy, budget, etc..

Posted by: oj at February 7, 2008 5:11 PM
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