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As Europe and Asia Hoard Cash air max 90 white outlet , Economists See Echoes of Crisis ECommerce Articles | April 3, 2017
European and Asian investors have been rushing into the United States bond market, spurred by a global glut of savings that has reached record levels.Running from near-zero interest rates at home, foreign buyers are piling into the booming market for corporate bonds, including high-grade debt securities issued by the likes of IBM and General Electric and riskier fare churned out by energy and telecommunications companies.
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European and Asian investors have been rushing into the United States bond market air max 90 balck outlet , spurred by a global glut of savings that has reached record levels.Running from near-zero interest rates at home, foreign buyers are piling into the booming market for corporate bonds, including high-grade debt securities issued by the likes of IBM and General Electric and riskier fare churned out by energy and telecommunications companies.
A growing number of economists are concerned that this flood of money may inflate the value of these securities well beyond what they are worth, potentially leading to a market bubble that eventually bursts.
More broadly, however air max 90 clearance outlet , these economists fear that an excess of ready cash in Europe and Asia is on the rise, which could keep a damper on global growth prospects.
That is because the cash, instead of being spent on building bridges in, say, Germany air max 90 sale outlet , or individual shopping sprees in China and Japan, is accumulating and being recycled into global capital markets, keeping interest rates artificially low as investors chase after returns.
And again, economists say, the burden is placed on the United States air max 90 shoes outlet , with its still fragile economy, to be the growth carbon steel pipe?engine for the world.
“Asia and Europe keep exporting their savings to the rest of the world,” said Brad W. Setser, an expert in global financial flows who worked at the United States Treasury from 2011 to 2015. “All this money sloshing around looking for a home is not healthy — it indicates a real lack of demand in other parts of the global economy.”
The surge in flows echoes a wave of investment in the years right before the financial crisis, when mostly European investors snapped up billions of dollars of mortgage-backed securities before the American housing market imploded.
The current numbers are also arresting.
According to Mr. Setser’s figures air max 90 china outlet , about $750 billion of private money has poured into the United States in the last two years alone. About $500 billion, he calculates, reflects European and Asian investors buying United States Treasury securities, bonds issued by Fannie Mae and debt issued by American companies.
The rest comes from American institutional investors unloading their zero-returning European bonds and looking for some extra yield closer to home.
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