At present, the US and Japanese central banks are involved in massive bond purchase operations which are raising liquidity in both their banking and corporate sectors. Many of the funds that are being generated by these operations are then finding their way out of their respective economies and into the wider global system, with the result that global capital flows are reasonably buoyant at present. We should note however that many of these flows are occurring because the investors concerned are being advised by the investment bank strategists and asset consultants to quit 'safe bonds' and instead look for share market and other risk market exposures in advance of an economic recovery. Unfortunately, there is no evidence to support the notion that a global economic recovery is occurring but there is simply an assumption that one will occur before 'too long'.
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