The NBER comments...

...on themes readers of this blog already know about. Note the flows and ramifications for the dollar.

The U.S. net international investment position at yearend 2008 was -$3,469.2 billion (preliminary), as the value of foreign investments in the United States continued to exceed the value of U.S. investments abroad (table 1).  At yearend 2007, the U.S. net international investment position was -$2,139.9 billion (revised).     The -$1,329.3 billion change in the U.S. net investment position from yearend 2007 to yearend 2008 resulted from (1) declines in the prices of U.S.-held foreign stocks that surpassed declines in the prices of foreign-held U.S. stocks, (2) the depreciation of most major currencies against the U.S. dollar that lowered the dollar value of U.S.-owned assets abroad, and (3) net foreign acquisitions of financial assets in the United States that exceeded net U.S. acquisitions of financial assets abroad.  The impact of these differences was partly offset by “other” changes (such as changes in reporting panels and capital gains and losses) that raised the value of U.S.-owned assets abroad and lowered the value of foreign-owned assets in the United States.     The following are highlights for 2008:  *  Foreign acquisitions of financial assets in the United States, excluding    financial derivatives, were $534.1 billion in 2008, down substantially from    $2,129.5 billion in 2007.  In 2008, foreign acquisitions of Treasury    securities and foreign direct investment in the United States were especially    strong.  In contrast, foreign residents sold more U.S. securities other than    Treasury securities than they purchased, and U.S. banks’ and nonbanks’    liabilities to foreign residents fell sharply.  

*  U.S. acquisitions of financial assets abroad, excluding financial    derivatives, were $0.1 billion in 2008, down substantially from $1,472.1    billion in 2007.  In 2008, U.S. banks’ and nonbanks’ claims against foreign    residents fell sharply and U.S. residents sold more foreign securities than    they purchased.  However, U.S. direct investment abroad remained robust and    U.S. government holdings of foreign currencies increased substantially as a    result of unprecedented net drawings on temporary reciprocal currency    arrangements between the U.S. Federal Reserve System and foreign central    banks.