US Multinationals Focus Europe
Where I am going with this
US investments in Europe huge, $9TR OF ASSETS and rapidly growing, esp E. Europe They are part of a huge asset side of the US international balance sheet. Our investments esp. in old Europe are hugely profitable Partly explaining how US thrives this far in spite of big and growing debt
US assets in Europe $ trillions 2000
2001
2002
2003
2004
2005
2006
2007
2007% 2000
Europe
3.11
3.40
4.07
4.84
5.86
6.36
7.56
8.97
288%
UK Neth
1.34 0.38
1.42 0.42
1.56 0.54
1.77 0.66
2.15 0.85
2.36 0.91
2.96 1.04
3.50 1.25
261% 331%
Luxem Germany
0.15 0.30
0.15 0.32
0.29 0.35
0.41 0.39
0.54 0.44
0.60 0.45
0.76 0.52
0.87 0.61
578% 202%
Ireland Switz France Belgium Italy Spain Sweden Norway
0.11 0.15 0.19 0.12 0.09 0.07 0.05 0.02
0.19 0.17 0.19 0.15 0.09 0.07 0.06 0.02
0.24 0.20 0.21 0.17 0.11 0.09 0.08 0.03
0.31 0.24 0.22 0.23 0.13 0.12 0.10 0.03
0.35 0.32 0.26 0.25 0.14 0.13 D 0.04
0.40 0.34 0.27 0.24 0.15 0.15 0.10 0.06
0.43 0.40 0.29 0.27 0.17 0.17 D 0.06
0.56 0.44 0.35 0.30 0.21 0.20 D 0.07
525% 287% 185% 253% 241% 310% 199% 333%
Denmark Russia Portugal Hungary Poland Kazakh
D 0.01 0.01 0.01 0.01 0.01
D 0.01 0.01 0.01 0.01 0.01
D 0.01 0.02 0.01 0.01 D
D 0.01 0.03 0.01 0.01 D
D D D 0.02 0.02 D
0.04 0.05 0.03 0.02 0.02 0.03
0.05 D D 0.03 0.02 D
D D 0.04 0.04 0.03 D
D 822% 420% 714% 243% 247%
US gross assets and debt $$ TRILLIONS $20 $18 $16
FOREIGN DEBT US NET FOREIGN DEBT OTHER US ASSETS
$14
OTHER US DIRECT INVESTMENT
$12
USDI IN EUROPE
$17.6 Gross $3.4 Net
$10 $8 $6 $4 $2 $0
USFDI $3.4 Total $1.8 Europe
US investments in Europe
Biggest countries direct Investment (equity)
Earnings on European investment
How the hell did we last this long?
Good investments—also get forex gain Low liability costs—in $ “disappearing” our liabilities, Rockefeller center. Dotcoms, Mortgage Backed—soft default
Hodge’s Iron Law of Intl finance
So net debt =/= cumulated deficits
And net foreign earnings stay + 900,000 800,000
Intl income receipts
700,000
USFDI receipts
600,000
USFDI receipts from Europe
500,000
Intl income payments +
400,000 300,000 200,000 100,000 0 1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Bottom line: USFDI earnings about 1/2 US asset earnings Europe earnings-- $146 bio, 8% return, about twice small intl earnings surplus