Bonus graph
A quick chart showing how my estimates (from work I have done with Arpana Pandey of the CFR) for official...
How much do the major Sovereign Wealth Funds manage?
This post is by Brad Setser and Rachel Ziemba of RGE Monitor A score of recent reports have put the...
Still growing …
The Fed’s custodial holdings of Treasuries just topped $2 trillion. Custodial holdings of Treasuries rose by $25 billion in July....
Pot calling kettle black?
One thing that has puzzled me is that some of the countries that have — implicitly at least — been most critical of the expansion of the Fed’s balance sheet during the crisis have long had much larger balance sheets than the US Federal Reserve.
Before the crisis, the Fed’s balance sheet was around 6% of...
Doesn’t a smaller (external) deficit mean less dependence on (external) creditors, including China?
There is a common argument that the US depends more on China now than before because the US needs to issue so many Treasury bonds to finance its fiscal deficit.
I disagree, for two reasons:
First, the trade deficit is down significantly, so the amount that the US needs to borrow from the rest of the world...
Not necessarily always stabilizing …
One common argument — at least prior to the crisis — was that sovereign investors, because of their long-term focus, were generally a stabilizing presence in the market. Sovereign wealth funds in particular. And presumably central bank reserve managers as well. After all, in many cases, the line...
Two trillion and counting …
China’s latest surge in reserves – a surge that look its total holdings over two trillion dollars – didn’t really register in the financial media. China’s first trillion was a big story. The second trillion, not so much. It generated a few news stories and blog...
SAFE, state capitalist?
One of the questions raised by the expansion of sovereign wealth funds – back when sovereign funds were growing rapidly on the back of high oil prices and Asian countries’ increased willingness to take risks with the reserves – was whether sovereign funds should best be understood as a special breed of private investors motivated...
And now, the rest of the story: long-term portfolio flows have fallen by more than the trade deficit
The goods news: the US trade deficit has shrunk. On a rolling 12m basis the trade deficit is down to around $500 billion, and the data from the last few months suggests that it should fall even further.
The bad news: the US trade deficit hasn’t shrunk by as much as foreign demand...
