Money is running toward the U.S.

Between day and night at the world alarmed by the spread and deepen the financial crisis, America - the national "homeland" of the current crisis - have witnessed a period of good for the money they - the U.S. dollar.

 
Paradoxically dollar exchange rate increased compared with the other major currencies while the U.S. economy faced a series of challenges that can explain why?

 

 
"Zero sum game"

 
The fact that U.S. investors are drawing capital into the country to buy U.S. treasury bonds, asset classes that they are super safe. China also continues to promote the purchase of debt of an economy in the world. The U.S. Treasury bond order is an important source of financial help the government Barack Obama has thousands of billion dollars to rescue banks and stimulate the economy.

 
In the context of the global economy offers feature is the lack of capital and trust, with investments and operations around the stalled loan, the money flows moving toward making America more crisis elsewhere in the world more seriously.

 
Capital movement is not unlike what a "zero sum game" (zero-sum game, then the other person is lost). One USD is the central bank and foreign investors to buy U.S. treasury bonds means that funding for other countries, including Eastern European countries are struggling to find money sources to pay debts, down 1 USD. That was 1 USD that African countries are thirsty aid and foreign investment were beyond reach.

 
"Virtually all poor countries are facing serious problems," said Eswar Prasad, a former official of the International Monetary Fund (IMF), also a senior fellow at the Institute Brookings Institution in Washington, USA, said. "This is the third wave of financial crises. The poor countries are strongly affected by this crisis. Private capital flows into emerging markets is diminishing, "he said.

 
According to the Institute of International Finance (IIF), the amount of private capital investment in emerging economies have fallen from $ 928 billion in 2007 to $ 165 billion in 2008.

 
Of course, not all the flows of capital losses have both come to the United States. Global investors tend to hold capital dagger and fled from risky investments in the fastest possible rate. In the U.S., the investment flows of foreign investors are also slowed significantly.

 
However, due to investors leaving the U.S. for doing business in external markets and the withdrawal of water, while other central banks around the world, especially China, is pushing to buy bonds U.S. Treasury, the U.S. should still absorb a significant amount of capital withdrawn from other markets run. And this fact makes the market more than the U.S. capital khan.

 
History repeating

 
This is shown most clearly in Eastern Europe. The businesses in this area has a lot of debt in foreign currency to invest in major projects such as office buildings, factories ... The value of the currencies of this region are strongly sloping labor, this debt while not enlarged, leading to serious losses in the banking sector, forcing the government to take action to rescue next to the support of the IMF.

 
Other economists have found many similarities between the financial crisis in Eastern Europe with what happened in Asia during the last crisis in 1990. After a strong increase in foreign debt operations, reversal and departure of foreign capital flows has made the region's currencies, especially the currencies of Thailand and Indonesia, free fall, triggered a wave of defaults began, pushing unemployment and poverty soared.

 
"What took place in Eastern Europe is very similar to what happened in Asia in the late 1990", economist Brad Setser of the Council of American Foreign Relations in New York reviewers.

 
However, in a certain aspect, the present crisis is more serious part. In the 1990s, the rest of the world economy, in addition to the water crisis, growth is very strong. Then, just when the hazard reduction, Asian countries immediately return to positive growth through the export to major markets like the U.S., Europe, Japan and China.

 
In fact, the strong devaluation of the currencies in which the crisis was brought back to a source of positive support growth, for helping the goods of other countries Thailand, Malaysia, Indonesia and Korea have low rates than on the world market.

 
This time is different, just poor countries faced with the devaluation of the currency, just to cope with economic recession and falling demand for goods takes place on a global scale.

 
"The rebate money can not compensate for the slipping slope floating world economic growth," Mr. Setser said. This expert stressed that exports of these economies leading exporters such as Japan, Korea, Taiwan and Brazil have declined in recent months. "What country is hurt by this crisis," he said.

 
Observers fear, there will be time to add more countries fall into similar difficulties. Brookings Institution expert Brasad countries listed in dangerous areas, including Vietnam, Philippines, Malaysia, Indonesia, Pakistan and Ecuador.

 
During the Asian financial crisis 1997-1998, many countries especially in the storm affected most by the value of the currency is tied to dollars. Once the central bank runs the country's foreign exchange reserves in dollars, the currency of these countries will be greatly reduced, making the debts of foreign capital has become a huge debt to the "extraordinary" .

 
Currently, many countries have allowed their currencies to adjust according to market rates, rather than tied to a fixed money somehow. However, according to Kenneth Rogoff, former IMF chief economist and now a professor at Harvard University, USA, by economic activity slows and banks stuck between the big losses, damages the devaluation of the currency may be far beyond the financial rescue of the government. According to this expert, so, many European countries has now been pushed to the brink of insolvency.

 
News in America?

 
Just two years ago, many analysts expressed the view that the IMF - the institution founded over six decades ago to rescue the country from financial events - no reason to exist. Currently, the IMF is trying to mobilize more resources for the 350 billion budget of the agency, to help developing countries solve the crisis. According to Setser, IMF need about 1,000 billion dollars to bring this country out of the "financial storm" sweeping.

 
The main fear is while the world weighed heavily, and the U.S. dollar are the beneficiaries. Statistics from the U.S. Federal Reserve (Fed) showed that within 1 years, the dollar was going up 13% compared to the major currencies of the world, in which both factors into account inflation development. Particularly in 2008, the amount of U.S. Treasury bonds that investors worldwide hold 456 billion dollars has increased.

 
"This is a very large effects from the perspective that the U.S. government will never default," says economist William Cline of the Peterson Institute for International Economics, based in Washington commented.

 
Which is the main currency in global economic activity, the dollar is continuing to re-affirm his position as reserve currency of the world. Just last year, some analysts said, when the U.S. economy goes down, the central bank would be afraid to use the dollar in reserve. But this theory has been proven completely opposite.

 
At the moment everything happens normally, the price of dollars will make up the U.S. concern over the export activities of this country is hampered. But for policy makers in the U.S., what they care about now is to attract buyers of U.S. debt to raise money for the economic rescue plan. In this process, the dollar is going up it'll be worth the price.

 
"The fact that America can still loan with low interest rates will help America escape these adjustments also much more serious," Mr. Rogoff said.