Is foreign investment hurting our economy, or is it a result of the US mortgage collapse?

Question

Is foreign investment hurting our economy, or is it a result of the US mortgage collapse?

Answer 1

weak dollar makes things cheaper for foreigners.

Answer 2

People will invest their money where they think they will get the greatest return. Foreign investment, per se, does not hurt our economy, it just throws it out of whack for a while. If the Japanese are investing heavily in the US, we will have too many yen and not enough dollars. Then the Fed has to sell bonds to up the number of dollars, the interest rate takes a p**p, and we hang near recession.

All the mortgage collapse did was take alot of the American investment dollars of the market. Then businesses and individuals can't get credit to expand or build businesses, or but new homes or cars. That would normally send the interest rate up, but the Fed lowered the interest rate to head it off.

Our productivity isn't keeping up with the rest of the world and our currency is seen as week. Eventually, it all comes back to normal- but do we have the time?

Answer 3

It's a lot of stuff. We're borrowing tens of billions of dollars at a time from other countries which contributes to the decline in the power of the dollar. Also, gas is taking money out of everyone's pockets as it is, then their adjustable mortgage goes up! Consumption is at a standstill, and that's what will throw us into a deeper recession, possibly a depression. Economists have been saying for years that we're due for a depression, whether it's next year, or ten years from now - it's only a matter of time.

Oh yeah and Bernake sucks, someone find the fountain of youth so we can get Greenspan back! AND GET THIS CLOWN OUT OF OFFICE

Answer 4

Foreign investments and ownership are a result of US excessive borrowing, budget and national deficits, which are the result of US, as citizens and as a government, consuming/ spending much more than we are producing/ earning. We have been living beyond our means as a nation. So to finance the extra consumption, we had to borrow from foreigners, sell our assets, sell government bonds to foreigners to finance our wars and our bailouts.

So to anwer your question, foreigners are what standing between US and general bankruptcy. But that does not mean these investments are good though. As we borrow more, we have more interests to pay, we have to sell more assets. Someday, either they will stop financing us and force us to declare bankruptcy, or we will wake up someday, owned by foreigners, which is not a good thing no matter if they have good intentions or not.

The mortgage mess is only a catalyst, an event that exposed all these problems but is not the original problem. When the huge government and private deficits and liabilities will come due, the mortgage collapse will look like a nice pick nick.

I have no intention to scare you, but problems we face are huge, and we probably crossed the line where we can stop/ remedy these problems.

And if we want someone to blame, it is absolutely not foreigners. Here is list to start with: Governemnt, Federal Reserves, Congress ... and most importantly, the mirror when we look at it.

EDIT:

Greenspan back? Are you kidding? If there is anyone who to blame it would be him and his inflationary policies. OK Bernanke sucks and didn't react appropriately. But he is simply bearing the burden and results of his predecessor's policies. You think because Greenspan got us out of the NASDAQ-related recession he is a hero. He just gave us a hereoine shot in the arm. If there is any direct causes of housing and credit problems we are in today, his 1%, inflationary policy appears very high in the list.

Answer 5

No. Is the war that hurting the economy.

Answer 6

The US government and tax payers will bear the final burden

of mortage crisis. Greed is the cause of this disaster;

the mortgage crisis is because economic expansion that causes overoptimism; real estate companies promising too much, building too much; and they lied too much and I believe real estate company and banks knew this crash will happen; and instead of fixing the problem they switch the problem to home buyers; by providing too much credit given at low rates