Global Economy

[acharya]

<b>Asia Rethinks American Investments Amid Market Upheaval</b>
September 18, 2008, 7:37 am<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->
“When the dust settles, I think Asia will come out ahead of the U.S.,” he said.
If cash is king during the current global financial crisis, then Asian governments and financial institutions are emperors. China’s central bank alone has $1.8 trillion in foreign reserves. Those reserves grew $280.6 billion in the first half of this year — a pace of $64 million an hour.

Americans have a huge stake in what China does with that money. Foreign cash coming into the United States to buy American assets holds down interest rates by making plenty of money available for the federal government to borrow to cover its budget deficit, and for consumers to borrow so that they can afford imported cars, DVD players and other goods.

Commerce Department data released on Wednesday showed that the nation’s current-account deficit, the broadest measure of trade in goods and services, had a deficit of $183.1 billion in the second quarter.<!--QuoteEnd--><!--QuoteEEnd-->