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To: Mike M2 who wrote (95960)	4/18/2001 5:27:50 PM
From: yard_man	Respond to of 436258

Would love to hear comments on this >>The key to understanding how this can happen is to consider how little information the flow of funds accounts provides about the true ownership of assets and liabilities. As far as the US external capital account is concerned, hedge funds based in the Caribbean are overseas investors. The activities of overseas branches of US commercial banks are also considered to be foreign transactions. Also, London, and Zurich are clearing-houses for all manner of nominee accounts and anonymous trusts. Around two-thirds of all US bonds recorded as UK-owned belong to UK entities representing non-residents. To fear that foreign investors will one day abstain from fresh investment in US financial assets, leaving the current account deficit uncovered and the US dollar prone, is to suppose that foreigners are the sole instigators of these external financial flows in the first place. It is quite likely that a substantial proportion of these external flow-demands for US corporate bonds and equities are, in fact, US-originated. US residents’ subscriptions to leveraged hedge funds reappear as foreign investment in US securities. US commercial banks’ overseas branches borrow in euros locally to invest the proceeds in US bonds, playing the yield curve. <<