Bob Doll highlighted the disconnect between long-term and short-term rates in his latest review. The chart below plots the 3-month T-bill rate against 10-year Treasury yields.
At this stage, the disconnect is not significant. But a disconnect as in 2004 – 2005 is far more serious. Large Chinese purchases of Treasuries prevented long-term rates from rising in response to Fed tightening, limiting the Fed’s ability to contain the housing bubble.
How far should countries go to encourage foreign investment? Jelena Dzankic writes that in a time of economic crisis, some countries in Europe are now seeking investment in exchange for citizenship. Assessing recent developments in Bulgaria, Hungary, Portugal and Ireland, she argues that despite the obvious financial benefits to such policies, they are not without risks. They may raise the potential for tax evasion and security issues, and could also reduce the relationship between the individual and the state to that of a business contract.
Read more at The eurozone’s struggling economies are increasingly selling citizenship to raise much needed capital. | EUROPP.
China’s refusal to open its economy to foreign investment could backfire by encouraging European politicians to curb Chinese investments on the continent, the European Union’s trade chief has warned.
via Beijing warned on foreign investment – FT.com.