Did You Know...?
A: Heading to Inman Conference in SF tomorrow, so I will not be blogging for the next 4 days. For today, as I go over my bullet points for the BULL vs BEAR debate, I figured to post a 'Did You Know' article that goes over some of the things that most people probably didn't know. Enjoy and as always, your two cents and any corrections are appreciated.
1) $450,000,000,000 - The approximate amount of write-downs to date from the financial sector stemming from the subprime crisis and housing market downturn
2) $325,000,000,000 - The approximate amount of capital raising to date in the financial sector
3) $9,500,000,000,000 - The approximate amount of the National Debt (source)
4) $5,600,000,000,000 - The approximate amount of total residential loans that Fannie Mae & Freddie Mac either own or guarantee (source)
5) $900,000,000,000 - The approximate value of the Fed's portfolio
6) $450,000,000,000 - The approximate amount that the Fed used of its total portfolio to help ease distress in the credit markets
7) $985,000,000,000 - The approximate amount of US agency debt held by foreigners; mainly China, Russia, and the oil countries (source)
8) $230,000,000,000 - The approximate amount of Fannie & Freddie debt purchased by foreigners in the past year
9) $710,000,000,000 - The approximate amount of the global US current account deficit last year; or 5% of US GDP (source)
10) $1,000,000,000,000 - The approximate amount of foreign money the US must import each year to support the current account deficit
11) $14,300,000,000,000 - US GDP (source)
12) $411,000,000,000 - The increase in the amount of foreign-owned assets here in the US, in the 1Q of 2008 alone, following an increase of $380.4 Bln in the fourth quarter (source)
13) Between $1,000,000,000,000 - $2,000,000,000,000 - The implied total credit losses predicted by Professor Nouriel Roubini (source)
14) $1,300,000,000,000 - The entire capital of the US financial system; as stated by Professor Nouriel Roubini (source)
15) $53,000,000,000 - The approximate total amount of funds held by the FDIC (source)
Needless to say, the topic of foreigners continuing to purchase our debt is becoming a media favorite! Feel free to offer your thoughts, opinions, corrections, updates, additional sources, or anything else to get a better hold on some of the astronomical numbers we are talking about here!
Posted by Ben Bernanke
Mon Jul 21st, 2008 12:29 PM
Is anyone else dizzy?
Posted by UrbanDigs
Mon Jul 21st, 2008 12:36 PM
Ben - hey, out of everyone, you should be used to it by now! When will you raise rates?
Posted by Query1
Mon Jul 21st, 2008 12:55 PM
Just today Ben Stein wrote in his online column that the "aggregate losses in the U.S. stock market since hte peak last October have totaled rougly $3.5 Trillion.
My personal favorite "aggregate" number is the $45-$60 Trillion in CDS contracts many of which are held by the banks. Before this is all over we one day will have a chance to read about the losses on these.
Posted by Justicia
Wed Jul 23rd, 2008 12:59 AM
This is breathtaking. We're looking at a slow motion train wreck.
The Financial Times ran a great article today on the economic delusions that got us into this mess: http://www.ft.com/cms/s/0/b89eb5b2-5804-11dd-b02f-000077b07658.html
Thanks for giving it to us straight up.
Posted by Beth
Wed Jul 23rd, 2008 05:13 PM
It's one thing to post numbers, another to describe what they mean. Foreign ownership of debt can actually be a good thing, keeps our interest rates low and it's a sign of how competitive our capital markets are on a global scale.
For the general public, listing these figures together on one list does make a statement!
Posted by Beth
Wed Jul 23rd, 2008 05:14 PM
It's one thing to post numbers, another to describe what they mean. Foreign ownership of debt can actually be a good thing, keeps our interest rates low and it's a sign of how competitive our capital markets are on a global scale.
For the general public, listing these figures together on one list does make a statement!
Posted by Noah
Thu Jul 24th, 2008 10:41 AM
Beth - True. However, what happens if foreigners decide to either:
a) slow down future purchases of our debt
b) dump some of their holdings
??? Owners of our debt are already seeing their holdings lose valu due to the drop of our currency. Its the question of what happens if our dollars continue to fall and ramifications of that in terms of foreigners purchasing our debt that should be the worry.
Posted by Beth
Thu Jul 24th, 2008 01:30 PM
Good point, Noah. In many ways foreign ownership is a good thing, but there is always that risk.
It's a vicious cycle in that the stregnth of our economy attracts investors, yet their ownership also affects our currency, interst rates, etc.
Every issuer wants to diversify its invesstor base, and the US is no exception. Ownership has been increasing outside of the US as the world economy has become more global. And investors can dump/divest for a number of reasons, either because of our own issues (deficit, economy) or because they might have found investment alternatives as other nations emerge.
Just like every company has to clean up its balance sheet to obtain a better credit rating and attract investors, the US must do the same; unfortunately it's not that simple trying to deal w Congress, the Fed, competing government bodies, etc.