[Marxism] Flows of Funds

S. Artesian sartesian at earthlink.net
Thu Mar 19 19:01:58 MDT 2009


"Crowding out"-- of those seeking to purchase  OTHER than dollar denominated 
assets by US Treasury issues, does not appear to be a reality in the capital 
markets.

In the first 2 months, European based companies issued, and sold, e100 
billion in debt instruments as compared to e105 billion in ALL of 2008. 
Risk premiums were considerably higher for the companies issuing the debt, 
but the issues found substantial demand.

In addition, the WSJ reports that, while China added another $12.2 billion 
in US Treasury instruments to its holdings, making a total of about $740 
billion,  January saw a substantial net foreign capital outflow from the US 
of $148.9 billion in January, as compared to a net inflow of $86.2 billion.

One month does not a trend make, but still... has some in the US worrying 
about refinancing US debt.

Another facet of the run-up and blowback on the current economic 
predicament--based on some data published in the FT of 3/17,  if you look at 
the 2003-2007 recovery, you see that personal savings rates as a % of GDP 
for Germany, Japan, China increase significantly over this period-- in 
effect, as much as the domestic market appears to grow, it does not grow 
proportionately as GDP.  In fact, Germany, Japan, and China relied upon 
exports to sustain output.

This reliance on exports was then refracted as the recycling of dollars into 
US debt instruments through banks, as the limitations of the domestic 
markets and the "saving gluts"could find an  outlet in the only markets big 
enough and liquid enough to handle the cash flows-- the US capital market, 
particularly the asset-backed capital markets, or the private equity funds, 
which are in reality exactly the same thing-- debt funds backed by their 
asset-stripping of companies taken over. 





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