I have decided to post under chit-chat since this is not a pure trading subject. My feel on the US economy is mixed to bad. So when I listened the BBC and the big buzz was the Saudi investors who have pulled out recently. The reasons the news analyst gave was the Lawsuit pending against the Loyal family and others due to the 911 affair. Dollar headed lower. Stock market was propped up. No doubt by intervention.
The Saudi's don't exactly have pocket change invested in US assets (look what Prince Alwaleed, or however you spell his name, owns: Citigroup, Apple, Amazon, etc). He's one of the richest men in the world. Any pullout of Saudi money will have some impact, but a much greater impact would occur if Japan or Europe pulled out en mass. A $450+ billion dollar trade defecit is creating a huge dependency on foreign money. If Japan gets their house in order and repatriates their money to invest locally, watch out.
A $450+ billion dollar trade defecit is creating a huge dependency on foreign money. If Japan gets their house in order and repatriates their money to invest locally, watch out. I don't know what will happen, all I know is that I've been hearing this since I came to America (15 years ago).
It's true that people have been talking about the negative effects of the trade deficit for a long time. 5 years from now, there still might be alot of foreign money coming here. But it's like having a crack in a dam. The crack gets bigger and bigger and eventually, it will burst open. When the whole world tilts towards the US for their investments, isn't inevitable at some point that they'll pull out? Whether it's because of terrorism in the US, or an economy that goes south or because other economies get their act together, something is going to change the tide. Eventually, at the current rate, foreigners will own most US assets.
Cause and effect? Cause- US talking about invading Iraq. Effect?- Terrorist attacks begin in Israel. Don't hear much about Iraq for a while. Cause- US talking about invading Iraq. Effect?- New video tapes surface about Al Quada terrorist training and its global nature. Are we being manipulated?
In my opinion, people who are able to are already leaving the US. As an example you can find a few traders here talking about moving out of the US (Costa Rica, Holland etc) but still trading the US markets. Thus, while folks agree that money is to be made here, no one wants to live here anymore. Perhaps, I am seeing a trend which does not exist. But, it appears to me that even the local populace is in a bind with corporate america. I would certainly expect the smart money to have been pulling out quite some time back. In fact, I am 100 % sure that big investors would have been selling big time in the past 1 month rally.
You forget about lots of people coming here every year. Legaly or illegaly. They don't have money but that can be productive actually.
You have a valid point. But the fact that traders are moving to off-shore is just the validation of "my sig" - NOW it is distinctly harder to make a living as a trader than in the prior bull market. There are several reasons why capital is leaving; COST of labor - manufacturing even software writing is moving off-shore to save cost. ESCAPE TAXATION - big money is moving to tax havens to save on US taxes (has been going on in Europe for ions) POLITICAL - this is the $25 question - where is the political landscape heading. Was the Saudi move a political move (or to shelter for possible freeze by the courts)? TRaders a leaving to live cheaper in some foreign land and use broadband technologies to have it "both ways", so to speak.