19 ms·
>I'm coming round to the belief that the big downside of free movement of goods/people/capital is the possibility of "sloshing" High capital flows do correlate
by crdoconnor 11y ago
>I'm coming round to the belief that the big downside of free movement of goods/people/capital is the possibility of "sloshing"
High capital flows do correlate with frequency and severity of financial crises:
http://www.voxeu.org/article/ez-crisis-and-historical-trilemmas http://www.voxeu.org/article/ez-crisis-and-historical-trilem...
This is why poorer countries tend to enact capital controls. Foreign capital has a tendency to flee all at the same time (for a safe haven like America), which is ruinous for the economy. There's something of a feedback loop there.
This is why some investors describe emerging markets as markets from which it is difficult to emerge in an emergency.
- kspaans 11y agoI've seen this article repeated in the NatPo[0], and more-or-less copied in the HuffPo[1], but no where else. I suspect this is mostly fearmongering. The US market is so much bigger than Canada's that most investment portfolio recommendations for Canadians include double-digit proportions of US equities and bonds. And if they are weighted towards energy, I can see why they'd shift south of the border. 0 - http://business.financialpost.com/investing/global-investor/money-is-flooding-out-of-canada-at-the-fastest-pace-in-the-developed-world http://business.financialpost.com/investing/global-investor/... 1 - http://www.huffingtonpost.ca/2015/11/02/canada-economy-manufacturing-capital-investment_n_8452426.html http://www.huffingtonpost.ca/2015/11/02/canada-economy-manuf...