Thursday, December 1, 2011
Fears of U.S Safety Keep Investors in Europe
With everything going on in Europe, you would think that more and more money is coming from abroad into the U.S. Well, not so fast. Data shows that even though the turmoil in the eurozone is causing money to fly out of Europe, doesn't necessarily mean it is coming into the U.S. Europeans do not feel that the U.S is a safe haven. Europeans are suspicious of how the Fed is using quantitative easing and are unsure of how their money will do in this economy.
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One reason why funds are not flowing into US is the ever low short and long run interest rates. However even when the credit rating of US was downgraded the yield on T-bills went down which shows that investors consider US market as the safest heaven for investment.
ReplyDeleteOnly about 5% of the $2.8 trillion invested in Europe has been pulled from the euro zone. That also indicated that investors are not as scared as people might think about Europe.
ReplyDeleteWhereas I initially thought it was good news that relatively little money had been pulled from the Eurozone, reading on I agree with the article that this fact is likely due to money moving from financially weak Eurozone countries to Germany, instead of to a safe haven outside Europe. European money flowing into Germany isn't a good trend for the monetary union, it will only hurt countries like Greece more
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