Investors play “hot potato” with US securities; Dollar beginning to sweat

The big headline in the Financial Times today was “Investors flee US securities.” It seems that “[f]oreign investors slashed their holdings of US securities by a record amount as the credit squeeze intensified.” Apparently, faith in America as a good investment is diminishing.

The article quotes Alan Ruskin, chief investment strategist for RBS Greenwich Capital, as saying, “The bad news is that [the data] plainly show how vulnerable the dollar is to a continuation of the credit crunch-risk averse environment.” Another article I read today (somewhere online, I think; I’m feeling too lazy to hunt it down!) mentioned that the leading players in this US security dump were China and Japan, if my memory is correct.

The U.S. has been playing a dangerous game with the dollar. While constantly giving lip service to a belief in the benefit of a “strong dollar,” the U.S. has been allowing the dollar to slide further and further for its own benefit: making our goods cheaper for other countries to buy and making the debts we owe less painful to our balance sheets. We have been assuming for some time that the confidence of other nations in America as a good investment will keep our gamble on the safe side of disaster, allowing us to fiddle with the dollar at will. As has been discussed on this blog before, we have been counting on the utter desperation of other nations who want to see their heavy investment in the U.S. succeed to motivate them to continually prop us up in a vicious circle. However, it is not inconceivable that a time will come when those other nations see the downside of propping up their investment fantasy as outweighing the upside, and they will cut their losses — especially if an option more viable that the U.S. comes along.

I also take note that a tiny, two sentence “News Digest” item on page 6 reports that unlike the U.S., Germany is “unfazed by [the] credit squeeze” and seems for the moment to have “received little more than a jolt.” Hmmm…

America’s foolhardy willingness to be propped up by foreign “lovers” reminds me of the prophetic admonishment of Jeremiah 30:14, “All your lovers have forgotten you; they do not seek you; for I have wounded you with the wound of an enemy, with the chastisement of a cruel one, for the multitude of your iniquities, because your sins have increased.” Actually, even if a return to a sound economy can be salvaged out of this thickening financial quagmire, there will come a time when “[t]hey will throw their silver into the streets, and their gold will be like refuse; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD” (Ezekiel 7:19).

Regardless of whether or not the U.S. is able to win this round of the dangerous game it is currently playing with its dollar and its foreign lovers, ultimately the solution is all about repentance from sin, not a strong dollar.

(FYI #1: For those interested in such topics, the most recent of my blog posts related to this subject might be “The US dollar’s debt to nervous central banks” and “Decoupling: World shaking its economic addiction to US?”, though these contain links to some posts representing the beginning of the discussion.)

(FYI #2: For those who might wonder why I would apply prophecies seemingly about ancient Israel to the U.S., please consider reading online or ordering our free booklet, The United States and Great Britain in Prophecy. I suspect you’d be amazed at what God prophesies for our nation — though the headlines make it less and less amazing with each news cycle, it seems. Just click on the links above or on the picture, below.

The US & GB in Prophecy

It really is free and without any obligation. If you order a free copy for yourself (which will have the helpful illustrations and charts), we will not sell your info to anyone or pester endlessly you about being visited. And we certainly won’t ask you for money! We simply believe that time is short and just want as many people as possible to have this information.)

2 thoughts on “Investors play “hot potato” with US securities; Dollar beginning to sweat

  1. That two-sentence remark about Germany reminds me of a conference the EU has had or is about to have on the problems that the financial state of the US pose to that organization. And that’s just the tip of the proverbial iceberg. With all the special trade negotiations the EU is undertaking around the world (sometimes in direct competition with China), it almost looks as if the EU is *planning* to pull the rug out from under the US at some point…or at least hedging its bets if the US stumbles on the same rug.

  2. Pingback: Forget the "Placard Prophet" on the street corner… « Thoughts En Route

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