It is pretty common for fictional collapse scenarios that involve an economic collapse to have one of the elements be that the "world" finally wakes up and pulls all of its money from the United States, and then looks on while we collapse.
Usually somewhere after all this there is some sort of Chines, UN, Norwegian, etcetera intervention that takes over some prime spot of our wonderful country. It is one of those rare places where the conventional conservative mind view (typical of these scenarios) has a positive view of California - since the Chinese are invading/occupying it all the time.
There is very simple problem to this scenario.
We are all here in the United States aware at the ineptitude of the our government. What we don't see is how badly other countries run their economies. And its not just Greece.
Here is an experiment you could try. Get a short term subscription to the hard copy (they will mail it to you) of the Financial Times of London. Introductory subscriptions are usually heavily discounted. And then force yourself to read every issues headlines and skim the stories.
I promise you, you will be stunned. Idiocies that we think of as exceptional here, are often the norm overseas. Our threatened budget shutdowns pale in comparison.
So while we may deserve to have everyone wake up and pull their money out of the dollar. The people who see what is going on in their own country are not in a real big hurry to put it into their own.
Money is fleeing China
Zarathustra, Macrobusiness, 17 May 2012 (hat tip: NC)
The detailed statistics from China’s April monetary statistics show that the change in the position of forex purchases has turned negative again in April.
With a relatively large trade surplus in April, this indicates that capital flow turned hugely negative. I estimate that excluding the trade surplus, capital outflow would be RMB177 billion (I don’t distinguish the type of flow). As explained in the past, under the current arrangements, a capital outflow will contribute to a tightening of monetary conditions within China. Thus we now know, more or less, the reason for last weekend’s decision to reduce Reserve Requirement Ratio. Indeed, while the 50bps cut of RRR would have made RMB421.14 billion available for banks to lend, almost half of that would have been offset by the April’s capital outflow:
Note that the red line is the trade being shown in surplus, while at the same time the blue line is cash leaving the country.
And while I had originally intended this to be Chinese focused, the news kept piling on:
Russian Data Shows Postelection Woes
IRA IOSEBASHVILI Ira Iosebashvili, Wall Street Journal, 16 May 2012
Russia's top central banker warned on Wednesday that capital flight is a "serious problem," as newly released figures showed $42 billion has left the country in the first four months of the year.
"Capital outflow continues to be a serious problem for the Russian economy," the central bank's chairman, Sergei Ignatyev, told Russia's lower house of Parliament.
I don't think we are going to see the Chinese in California (or the Russians) any time soon, but we may be seeing some of their cash their.
As amazing as it may seem to some, the Chinese may be heading toward a much worse situation than our own.