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Capital from China to the U.S.

In 2011, global financial markets exhibited the characteristics that make this year a turning point has to have some meaning, and the next view for 2012, probably because of this transition and will become more clearer. However, geopolitical turmoil and crisis hotbeds of policy puzzle still give next year’s market trends uncertain.
In the past few months we have witnessed scenes never seen over the past decade, in fact, determine the nature of these phenomena may affect the success of your investment next year. We first met in August to reduce the foreign exchange reserves surprising, if you think this is just the point that the roof leak rainwater, then the next thing will be slightly more serious cases, the central bank declined for four straight months of broad money growth and increased speed less than 15% of the fact that the market is indeed on much less money, which directly led to China’s financial markets to commodities from the stock market, the collective market crash.
We have been proud of that, China has never been short of money. Central bank in the past decade to increase the money supply more than four times the monetary authorities dare to act in such a basic fact is that China increased reserve assets day after day, when these reserve assets flow into China, the central bank may not do not have the same number of yuan to buy them, this is called “hedging” phenomenon has made China the center of the global monetary flows, it is like a black hole to attract an influx of global capital, but in the last month, the sudden foreign exchange allows investors to reduce the suffering head with a blow, this is a problem that in many of the evidence before us, we will see the question almost answers. The latest is that the yuan against the dollar limit of the phenomenon occurs for several days. And just two months ago, U.S. politicians are still to put pressure on RMB appreciation and brains, they both hardware and software to the Chinese leaders propaganda, this noisy two countries for many years.
Since then, they may be no need to fight for this thing go on, perhaps the demand for the yuan two months ago, reached its recent peak, the yuan trading in the market may have found its proper value. U.S. politicians, now you shut up!
Those described above, may be just a group of insects flew out before the earthquake, or a cat just died. It’s just a sign of things rather than the whole truth. What will happen next time, we absolutely do not need the next definition. But we can be sure that the above mentioned shows that the capital is flowing out of China, the destination is the United States.
The reality of China is the world’s ongoing capital campaign, a microcosm of it, at the same time, the crisis of capital are also the eurozone source showed the same scene, it seems many people have observed that in the Eurodollar market, the dollar interest rate is growing up, because when all banks and companies seeking to hedge U.S. dollar assets when the dollar’s purchasing costs and borrowing costs are rising rapidly, which makes dealing with the debt crisis are government heads of a headache, they The Fed last week joined hands together dollar exchange rate will be lowered by 50 basis points, this will of course reduce that market panic, or even the arrival of the new crisis, more come later.
Global capital flows back to the United States led to the most direct consequences of the U.S. dollar against major global currencies appreciate, over the years, global capital flows have two important characteristics: First, the U.S. has to continental Europe, the second is from developed countries to emerging market countries , especially in the U.S. subprime mortgage crisis is more apparent that the flow characteristics. As the euro-zone economy has been in the past few years, low inflation and steady growth in the state, while the appreciation of the euro against the dollar in the channel, attracting a steady stream of U.S. capital flows to Europe. Meanwhile, between developed and emerging market countries, the existence of huge spreads and currency appreciation in these countries caused by asset price inflation, capital flows from developed to emerging markets, the trend is more evident. In fact, when the dollar is from the U.S. to global capital flows, global liquidity will be relaxed, and returning to the U.S. dollar, the global liquidity will begin to shrink. In this background the market continue to look toward 2012, you will feel suddenly see the light?


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