TIC vs trade ballance

From top to bottom:
short - long term treasury spread
Treasury rates
Trade deficit of the US,blue % and yellow nominal
TIC+trade deficit yearly sum
TIC-trade deficit cummulative sum.


Top : TIC ballance,yearly,bottom TIC+trade ballance,yearly.

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Definition of the line 29:

Number 3: What is included in the flows reported in line 29 (monthly change in banks' own net dollar-denominated liabilities)?

A. These flows include changes in banks' own liabilities to foreigners in the form of deposits from foreign residents into U.S. banking institutions and borrowings from foreign residents (including funds borrowed under repurchase agreements), and changes in banks' own claims on foreign residents in the form of deposits in foreign banks and loans to foreigners (including funds loaned under resale agreements). Because interbank positions-which can include both claims on and liabilities to the same foreign entity-are a large part of the banks' own cross-border positions, these data are reported as the change in banks' own liabilities to foreign residents net of the change in claims on foreign residents. This series can be volatile on a monthly frequency. Note that while these data are referred to as changes in "bank" positions, the data also include the changes in own cross-border claims and liabilities of other depository institutions such as savings and loans associations and credit unions, and of bank and financial holding companies and securities brokers and dealers.

http://www.ustreas.gov/tic/ticpr-faqs-2006nov16.html

date	Sum net TIC line 30	trade deficit	trade-TIC	cumm trade-TIC	Cumm trade	Cumm TIC
1991	5341	-31135	-25794	-25794	-31135	5341
1992	94137	-39212	54925	29131	-70347	99478
1993	94722	-70311	24411	53542	-140658	194200
1994	176716	-98493	78223	131765	-239151	370916
1995	171166	-96384	74782	206547	-335535	542082
1996	254175	-104065	150110	356657	-439600	796257
1997	311501	-108273	203228	559885	-547873	1107758
1998	304774	-166140	138634	698519	-714013	1412532
1999	362921	-265090	97831	796350	-979103	1775453
2000	372007	-379835	-7828	788522	-1358938	2147460
2001	431351	-365126	66225	854747	-1724064	2578811
2002	757012	-423725	333287	1188034	-2147789	3335823
2003	717556	-496915	220641	1408675	-2644704	4053379
2004	978860	-607730	371130	1779805	-3252434	5032239
2005	664973	-711567	-46594	1733211	-3964001	5697212
2006	1061837	-753283	308554	2041765	-4717284	6759049
2007	612166	-700258	-88092	1953673	-5417542	7371215
2008	664056	-695937	-31881	1921792	-6113479	8035271
2009	-283613	-378629	-662242	1259550	-6492108	7751658

So,in november 2008 the US banks get more dollar denominated deposits from the foreigners than the ammount of the new loans issued to the not-US residents .

Which is interestign,the shape of the curve.It is a logaritmic curve,and we are on the top of it.

If we check the yearly cummulative numbers,then we can see a hugh drop in 2009.(jan-jan sum number)

If we assume that the fall in the net flow of funds will remain on the current (up to the feb of 2010) level,and the trade deficit of the US remain the same, then the money will run out within two years for the US to finance the trade deficit .

The possible outcome will be a swing from a 600 billion deficit to a 300 billion surpluss (roughtly the half of the Chinese economy)

Logic:the TIC (Cross-Border Portfolio Financial Flows) have to be ballanced by the trade deficit.

If we summarise the diference between them in the past few years (cumm trade-TIC) then we get the cummulatice diference between the money which was used to buy stuff and the borrowed money.

US summ data explained:

top:net spread between the short and the long term treasury rate

second:long and short term treasury rates

third:trade deficit , yellow nominal,blue % yoy

fourth: trade-TIC

bottom:cummolative trade-TIC

keyworlds:

TIC monthly reports on Cross-Border Portfolio Financial Flows

US goods and services balance of payments (BOP)

BOTTOM LINE:

With hte current trends,we can go only for two more years.