Reply #66: U.S. Investment Income Close to `Tipping Point' (Uh-oh) [View All]

[54anickel]

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=a3_fwP85dZzM

Oct. 13 (Bloomberg) -- The U.S. may be approaching a dangerous ``tipping point'' in its international transactions.

At the end of last year, foreign investments in the U.S. were worth $2.5 trillion more than this country's investments in the rest of the world. Yet last year, those U.S. assets abroad remarkably still earned $30 billion more than the foreign assets here.

That stunning disparity in returns is one of many reasons why the huge U.S. current account deficits of recent years have been so readily financed. The sagging net investment position wasn't being compounded by an ever higher interest bill -- as is the case with the mounting U.S. government debt.

This year the game has changed.

Net U.S. investment income turned negative by $455 million dollars in the second quarter, marking a swift deterioration from a $15 billion surplus in the first three months of 2004.

more on the buck's credibility...