Re:What Economists Still Don’t Get About the 2008 Crisis
by joefranklinsrs on Monday July 30, 2018 @03:22PM
(#17647195)
It’s simple; a lot of the QE from US left US and went to emerging markets, when there was an interest rate difference between those markets and US’s 0 percent. Overtime, the profits earned from those overseas investments stayed overseas. However, when China’s stock market collapsed in 2015 and more money started flowing back into US, US raise interest rate in late 2015. This prompted more return of money back into US, which prompted more economic slowdowns in emerging markets (enhanced by political instability in turkey, Russia, and rising debt in China). With fed raising rates higher and higher, and emerging markets slowing down even more, more and more of the QE money flew back to US. Thus the real estate boom in Silicon Valley, NY, and Los Angeles. Ironically, a lot of China’s QE resulted in the same flow; lots of money went into US real estate. And now we have dollar strength, rising interest rates, emerging market crisis, US gdp growth at 4% in q2
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Re:What Economists Still Don’t Get About the 2008 Crisis
by bbstevecou on Monday July 30, 2018 @03:30PM
(#17647257)
Yup, that's why China lost 3.8Trillion out of their 7Trillion wealth in the last decade. https://www.forbes.com/sites/insideasia/2017/02/22/china-cap...
And why China is in deep trouble because they have 3Trillion (supposedly) in foreign reserves, but IMF said China needs at least 2.5Trillion for normal import/export operations. So really, they only have 500B in foreign reserves. And now they're going through reserves even faster, selling dollars to prop up yuan, since yuan has now fallen 10% within the last few months.
Re:What Economists Still Don’t Get About the 2008 Crisis
by pas on Monday July 30, 2018 @07:12PM
(#17649046)
Why do they need 2.5T USD for import-export? Could you elaborate on this?
Re:What Economists Still Don’t Get About the 2008 Crisis
by simonh on Monday July 30, 2018 @07:50PM
(#17649318)
They need the reserves to cover their credit risk. This Forbes article lays it all out pretty well.
https://www.forbes.com/sites/salvatorebabones/2018/05/24/chi...