NYT reports:
American investors are ditching foreign ventures and bringing their dollars home, entrusting them to the supposed bedrock safety of United States government bonds. And China continues to buy staggering quantities of American debt.
These actions are lifting the value of the dollar and providing the Obama administration with a crucial infusion of financing as it directs trillions of dollars toward rescuing banks and stimulating the economy, enabling the government to pay for these efforts without lifting interest rates.
And yet in a global economy beset by a crippling lack of confidence and capital, with lending and investment mechanisms dysfunctional from Milan to Manila, the tilt of money toward the United States appears to be exacerbating the crisis elsewhere.
Eastern Europe is being hit particularly hard, but the repercussions are being felt around the world. Also, as countries watch their currencies decline they are hit with the double whammy of a major recession in which the demand for their goods is falling fast. I'm no economist but this sounds TERRIBLE to me. Any insights?
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