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cincynate
Joined: 07 Jul 2009
Location: Jeju-do, South Korea
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 Posted: Mon Jun 11, 2012 6:36 pm Post subject: |
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| Actually, it's a good thing. For one, it means increased foreign investment. |
Lowering interest rates usually results in a decrease in foreign investment. When the interest rate is lower, an investor will receive less return on his investment, and therefore will move his money to a country with a higher interest rate. When the FED lowered interest rates at the beginning of the market crash, money flew out of the United States. This is especially true of other Government's. They will stop buying debt issued by a country and start buying debt issued by a country with higher interest rates. |
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sml7285
Joined: 26 Apr 2012
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| Posted: Mon Jun 11, 2012 6:47 pm Post subject: |
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| cincynate wrote: |
| Quote: |
| Actually, it's a good thing. For one, it means increased foreign investment. |
Lowering interest rates usually results in a decrease in foreign investment. When the interest rate is lower, an investor will receive less return on his investment, and therefore will move his money to a country with a higher interest rate. When the FED lowered interest rates at the beginning of the market crash, money flew out of the United States. This is especially true of other Government's. They will stop buying debt issued by a country and start buying debt issued by a country with higher interest rates. |
True, but once again, not so simple. Savvy investors rarely look too closely at the exact interest rate anymore. This is due to the lack of liquidity of bonds (among other methods of purchasing debt). Keynesian theory is overly simplified when taught these days. Like I stated before, with the emergence of a multitude of stable currencies, the geopolitical atmosphere of a country plays a huge role in investing. A few decimal points aren't as important to real world investors as the ability of a country to maintain the status quo; just look at how heavily the Won was hit when the US declared sanctions against Iran. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Tue Jun 12, 2012 4:33 am Post subject: |
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| cincynate wrote: |
| Quote: |
| Actually, it's a good thing. For one, it means increased foreign investment. |
Lowering interest rates usually results in a decrease in foreign investment. When the interest rate is lower, an investor will receive less return on his investment, and therefore will move his money to a country with a higher interest rate. When the FED lowered interest rates at the beginning of the market crash, money flew out of the United States. This is especially true of other Government's. They will stop buying debt issued by a country and start buying debt issued by a country with higher interest rates. |
Actually, by "it" I was also alluding to a devalued won...but apparently the won had been going up. |
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sml7285
Joined: 26 Apr 2012
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| Posted: Tue Jun 12, 2012 4:48 am Post subject: |
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| 12ax7 wrote: |
| cincynate wrote: |
| Quote: |
| Actually, it's a good thing. For one, it means increased foreign investment. |
Lowering interest rates usually results in a decrease in foreign investment. When the interest rate is lower, an investor will receive less return on his investment, and therefore will move his money to a country with a higher interest rate. When the FED lowered interest rates at the beginning of the market crash, money flew out of the United States. This is especially true of other Government's. They will stop buying debt issued by a country and start buying debt issued by a country with higher interest rates. |
Actually, by "it" I was also alluding to a devalued won...but apparently the won had been going up. |
And what big event happened a few days ago?
The US gave a waiver to the ROK to continue purchasing Iranian oil. |
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NohopeSeriously
Joined: 17 Jan 2011
Location: The Christian Right-Wing Educational Republic of Korea
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| Posted: Tue Jun 12, 2012 5:39 am Post subject: |
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| I'm seeing more hagweon franchises that stop hiring both NETs and Korean teachers. A hagweon next to my workplace just fired 2 Korean teachers. I think it depends on the region. |
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4 months left
Joined: 07 Feb 2003
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| Posted: Wed Jun 13, 2012 4:44 am Post subject: |
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| sml7285 wrote: |
| cincynate wrote: |
| Quote: |
| Actually, it's a good thing. For one, it means increased foreign investment. |
Lowering interest rates usually results in a decrease in foreign investment. When the interest rate is lower, an investor will receive less return on his investment, and therefore will move his money to a country with a higher interest rate. When the FED lowered interest rates at the beginning of the market crash, money flew out of the United States. This is especially true of other Government's. They will stop buying debt issued by a country and start buying debt issued by a country with higher interest rates. |
True, but once again, not so simple. Savvy investors rarely look too closely at the exact interest rate anymore. This is due to the lack of liquidity of bonds (among other methods of purchasing debt). Keynesian theory is overly simplified when taught these days. Like I stated before, with the emergence of a multitude of stable currencies, the geopolitical atmosphere of a country plays a huge role in investing. A few decimal points aren't as important to real world investors as the ability of a country to maintain the status quo; just look at how heavily the Won was hit when the US declared sanctions against Iran. |
Some hagwons are well run and some aren't, some shiny new hagwons open up and take business from the old ones, it's a business constantly in flux.
Korean interest rates are still higher than the U.S's interest rate of 0%. Flight to "Quality" is happening now with investors believing the U.S. dollar is safe. Many Asian currencies are undervalued, in the short term anything can happen, in the medium to longer term the Won should strengthen.
Yes Keynesianism doesn't work and to make things worse governments do a piss poor job of putting that money to work ... hence the Obama quote that the shovel ready projects weren't so shovel ready. |
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