Steven Shafer blogs

A recent research note from Standard & Poor’s Valuation and Risk Strategies team lays out the 50 largest corporate cash holdings (excluding financials) and finds that of the $1.1 trillion (nearly equal to the amount held by the S&P 500), 58% is held outside the U.S.

Among those concerned about the uncertainty coming out of the Obama Administration is Electrcitie de France, which is holding$ 22 Billion in cash.

There has never been a US administration that struck fear into the hearts of corporations worldwide like this one. Its almost as eerie as the way the combined forces of Fannie Mae, Freddie Mac and the Community Reinvestment Act managed to gin up a housing boom in Ireland, Spain, Greece and even Latvia.

The powers of US big government know no bounds!

Of course an alternative theory is that players in the international capital markets mistakenly thought they had found away to hedge away the risk associated with housing investment, turned out to be wrong, went bust and created a global liquidity crisis.

I am being overly snarky of late. I suppose its my mood.

In any case there is a real lesson here. Its important not to be too US centric when analyzing these issues. The market only respects national borders when national laws or customs force it to.

To the extent that those barriers have broken down we should view the world as one big economy and look for the roots of a global crisis in global forces. Pervasive globalism is by and large the case in capital markets.

As a more general point libertarian minded folks should take their beliefs in the limited power of government seriously. As the global market place integrates governments have limited power to stop market forces for good or ill.

Lastly my conservative readers should not despair. The ascendency of the hard money crowd has focused my attention on the economic fallacies of the right. However, Modeled Behavior will be back to criticizing the nanny-state, protectionism and green jobs soon enough.

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