The US, the world’s hedge fund
By Max Fraad Wolff
There are some strange facts about the asset and trade positions of the US economy in the globalizing economy. The United States runs massive and growing trade deficits, is borrowing at a clip that would arouse the suspicions of a casino pit boss, and has been selling its assets to anyone who will buy. In the past 24 months, the US balance on goods and services comes in just shy of negative-$1.5 trillion. Across the same period, the US has sunk further into debt to the rest of the world.
For 2006, exports of US$1.4378 trillion and imports of $2.2014 trillion resulted in a goods and services deficit of $763.6 billion,
$46.9 billion more than the 2005 deficit of $716.7 billion. For goods, exports were $1.0237 trillion and imports were $1.8598 trillion, resulting in a goods deficit of $836.1 billion, $53.3 billion more than the 2005 deficit of $782.7 billion.
As a result of that shortfall the US has been selling assets and borrowing. The net international investment position (NIIP) is the Bureau of Economic Analysis’s broadest measure of US-owned foreign assets less foreign-owned US assets.
There has been a dramatic and sustained deterioration in the US NIIP over the past several decades. Between 1986 and 1988, the US transformed itself from creditor to the world to debtor extraordinaire. It has never looked back, nor has it been forced to.
Article
http://www.atimes.com/atimes/Global_Economy/IB27Dj02.html
The chickens are coming home to roost. While some people buy gold in preparation for this, I’m buying guns.I think my hedge will be a little more effective if our worst fears are realized.
