The economy is run by government
(posted by jackson)
The U.S. economy is increasingly run by government. But not necessarily the American government. Increased globalization means other countries have an increased desire to influence the direction of the American economy. This is especially true when it comes to the value of the dollar. Relatively poor emerging economies around the world are sending their money to the U.S. in an attempt to prop up the value of the dollar. As Brad Sester points out, foreign goverments also have an interest in proping the U.S. bank sector, partly to avoid the kind of economic depression in America that would impact their exports to America:
Counting the funds Kuwait and Korea committed to Merrill and Singapore and Kuwait committed to Citi, sovereign funds have provided US and European banks about $42b in new capital over the past two quarters. That tops the $30b the IMF lent out over a four quarter period in the Asian/ Russian crisis of 1997-1998, and is roughly the same size as the $40b or so the IMF lend out to Argentina, Brazil, Turkey and Uruguay over a two year period in 2001-2002. But it pales relative to the $54.7b increase in the New York Fed’s custodial holdings for foreign central banks between January 2 and January 30 of this month. Counting ADIA’s contribution along side the contributions from KIA and the GIC, Citi raised about $17.5b from sovereign wealth funds over a three month period. The US Treasury — judging from the rise in the New York Fed’s custodial data — got $29.7b in a single month. Custodial holdings of Agencies increased by only a bit less, $25b.
February 14th, 2008 at 1:42 am
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Tom Humes