Investors dump $89B in U.S. securities in historic fire sale

[RamboLiberal]

Source: USA Today

The deep river of private money that helped knit together the global economy has abruptly dried up, new government figures show.

As the global financial crisis grew more severe this summer, foreigners sold almost $90 billion of U.S. securities — the greatest quarterly fire sale by overseas investors since the government began keeping track in 1960. U.S. investors also are retrenching; they unloaded about $85 billion worth of foreign holdings in the quarter, says the Commerce Department's Bureau of Economic Analysis.

"We've had a global panic. Everyone is pulling their money home," says economist Adam Posen of the Peterson Institute in Washington, D.C.

That's bad for economic growth in the U.S. because it threatens to starve capital-hungry companies and entrepreneurs. But it's especially serious for emerging-market countries that rely heavily on outside financing. Capital flows into countries such as South Korea, Turkey and Brazil were evaporating even before the mid-September Lehman Bros. bankruptcy made things worse.

The reversal of private capital flows signals an abrupt end to a nearly two-decades-long era of financial globalization, says economist Brad Setser of the Council on Foreign Relations. Private flows into and out of the U.S. for purchases of stocks, corporate bonds and federal agency bonds have dropped from around 18% of economic output to near zero "in a remarkably short period of time," Setser says.



Read more: http://www.usatoday.com/money/markets/2009-01-04-foreign-investors-us-securities_N.htm

[DUlover2909]

1. It would be awesome if the top 1% in America just went flat broke.

I'd love it if every person that got Bush's tax cuts lost everything. It was a good 8 years wasn't it, Richie Rich's? I'm so sorry you have to get a real job now. You can rest assured though, because Georgie get's a $200,000 a year pension paid for by your taxes that you now have to pay since you can't afford tax lawyers and accountants.

I can dream can't I?

[dkf]

2. Maybe you can pray for 100 Maddoff types.

That's an odd thing to pray for though and probably bad karma.

[WriteDown]

7. Ridiculous...

So Warren Buffet, Steve Jobs, etc should just go broke? Envy is an ugly thing. I'd rather get rich then see them go broke.

[populistdriven]

8. Steve Jobs has invested repeatedly in politics

http://www.newsmeat.com/billionaire_political_donations/Steve_Jobs.php

[DUlover2909]

10. Yeah I know, It's sour grapes. I was just being mean.

[truthisfreedom]

3. Pain mostly felt in the middle class.

Stop the hate.

[mopinko]

5. +1

[Festivito]

4. There goes more money supply, here comes more deflation.

On the good side, we can buy back our own industries. On the bad side, well, there's too much to say.

[xchrom]

6. this is an interesting moment in globalization.

if this is the beginning of reversing the hollowing out of the american economy -- well it will hurt for a while --
but this could be good for us.

no i don't think ENDS globalixation -- but it might mean a rethinking of home economies.

[bushmeister0]

9. So the top 1% took all the money of the bottom 40% and basically blew it?

That's what happened?

All this "high finance" is a little staggering to comprehend to someone like me who is haapy just to be able to pay the rent and go out occasionally.

As I understand it, the super rich, W.'s "base," took all our money and lost it to fakers like Madoff and the crooks on Wall Street?

I guess, all the little people like us would have just wasted it on food, rent and mortgages anyway, right?

I'm telling you, right now, though, I could have thought of more intersting ways to spent all that money.