Reply to David Schanoes on the relative importance of FDI as regards bonds and securities movemen
dmschanoes at earthlink.net
Tue Sep 2 06:57:32 MDT 2003
You are a pip, JB. First you send me a communication offlist
which begins "Dear David," only it's routing address is to LP,
and I am cc'd, as are other people I know and don't know.
Now you decide to respond onlist to and post and offlist com-
munication. You definitely need a set of manners.
But let's go back to the beginning which was your posting
about a plethora of capital and that this indicated that there
was no crisis. My point is that the plethora of capital is
exactly the crisis.
NS then posted remark about the simultaneous "under/over" pro-
duction of capital, which I took exception to (only under/overs
I know are betting lines for sports contests, and the under/over
grenade launcher attacked to the M40.
Thus I included the data on FDI to indicate the rapid growth
of FDI in the developing countries.
Then we get to here and now.
US FDI and equity ownership, known as stock shares, exceeds the
combined bank claims and bond holdings. Income ratio from FDI
and equity positions exceeds the rate from the various debt
If you think there is some other measure of the significance of
capital flows in the development of the NIEs, something more
important to, for example, China's growth than FDI, please
provide it. Would love to see it. China's debt is mostly
internal and its transformation has been based almost ex-
clusively on FDI as opposed to South Korea's or Indonesia's use
Most international trade in services can and is captured and
accounted for in statistics on-- guess what? International
trade and earnings for the service sector. Investment in
service providers is also captured and included in FDI.
In 2001 US FDI dropped by approximately 1/3 to about 88
billion. Your claim that "US FDI abroad is accelerating" is
wrong, at least for 2001. Will have to recheck 2002, but I
bet it's below 2000's 130 billion.
US FDI is about 1.3 trillion. Of the US non direct investment,
defined by the BEA as "portfolio securities" stocks and bonds,
not bank claims, almost 3/4 is in equity ownership STOCKS of
foregin companies. Debt holdings are separate from equity and
the BEA does not confuse the two. Bank claims are not considered
in that part of the BEA presentation.
You say US FDI is "a minor fraction of total US capital assets
in foreign countries." I say you are wrong, dead wrong. But
be that as it may--- please provide your components of US
capital holdings, leaving out military bases, diplomatic
properties, private residences, etc. and the values you
attribute to each of the remaining categories comprising the
capital holding aggregate.
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