States. Concerns over the potential impact of disinvestment have grown as national governments have become more active investors and as uncertainty over the risks associated with securities backed by sub-prime mortgages has increased volatility in financial markets. Actions taken by foreign investors to liquidate their holdings
could affect the U.S. economy in a number of ways due to the role foreign investment plays in the United States and due to the current mix of economic policies the United States has chosen. The impact of any such action on the economy would also depend on the overall condition and performance of the economy and the financial markets.
If the economy were experiencing a strong rate of economic growth, the impact of a foreign withdrawal likely would be minimal, especially given the dynamic nature of credit markets. If a withdrawal occurred when the economy were not experiencing robust rate of growth or if credit financial markets were under duress, the withdrawal could have a stronger effect on the economy.”
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