A Farewell to Foreigners.(U.S. foreign investment)(Brief Article)(Statistical Data Included)

Instead of celebrating the euro's approach to parity with the U.S. dollar last week, European investors and analysts were close to quaking in their boots at the news of an ever-weakening dollar. But perhaps their fears are premature. After all, the U.S. Treasury and U.S. financiers aren't that worried. Why should foreigners be?

Despite hints to the contrary, the U.S. Treasury's strong-dollar policy still holds. It is economic circumstances that have changed. The technology and telecommunications bust over the past year and a half in the United States has halted the foreign-direct-investment spree of $1 trillion since the mid-1990s along with domestic investment. Meanwhile, foreign portfolio investment in U.S. stocks and bonds has come to a halt as the stock market has plunged. In April the inflow of securities-buying from abroad actually reversed, to the tune of a $19 billion net foreign withdrawal. These vast foreign-capital inflows were what had driven the dollar skyward in the first place, offsetting a U.S. trade deficit that widened as the U.S. boom progressed. The trade deficit now runs at a rate of $450 billion per year, and with those foreign ...