Global Imbalances and Global Financial Turmoils

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Global Imbalances and Global Financial Turmoils

• Dr. Sompop Manarungsan
• Faculty of Economics
• and Chinese Studies
  Center
• Chulalongkorn University
• Bangkok 10330, Thailand

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• Regrouping of Countries According to Their
  Economic Structure
• - Collection Economy
• - Production - based Economy
• - Service - based Economy
• - Speculation Economy

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Causes of Global Imbalances - Expansion of
Speculation Economy due to Excessive Money
Supply - US - other currencies - Increases of
Speculators - Types of Speculators - Hedge
Funds - Mutual Funds - Pension Funds -
Private Equity Funds
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- Sovereign Wealth Funds - Investment Banks
and Finance Companies -
Other Fund Managers - Speculation Activities -
Money Market - Capital Market - Commodities
Market - Property - etc.
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Sources of Excessive US Dollar Supply - USs
Expansionary Monetary Policy - Reduction of
Federal Funds Rate - Reduction of Discount
Rate - USs Expansionary Fiscal Policy - Deficit
Budget - Extremely Low Household Savings in the
USA Owing to High Domestic Consumption -
Injection of US Supply into Economic Cycle.
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- Increases of Petro Dollar due to Rising Oil
Prices - Causes of Rising Oil Prices -
Increasing Oil Demand - Speculation - Increases
of Basic-Commodities Dollar Owing to Rising
Basic Commodities Prices around the Globe -
Huge Increases of Foreign Reserves - Increases of
Property Prices - Speculative Bubble Boom in
Real Estate Sector - Increasing Roles of
Property Funds
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- Rising Speculation in the Financial Sector -
Money Market - Currency market - Capital
Market - Stock market - Bond market
Unprecedented Increases of Money Supply,
Particularly the US dollar
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Quickening International Capital
Flows Rising Global Global
Financial Imbalances
Turmoils
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Major Causes of Global Excessive US Dollar
Supply 1. USs Expansionary Monetary Policy 2.
USs Expansionary Fiscal Policy 3. USs
Speculative Bubble Expansion - Property
Sector Causing Subprime Crisis
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Triggering Speculation in
- Basic Commodities Market - Energy
Market - Money Market - Capital Market -
Others
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Chinas Roles to Rebalance the Global Economy -
Chinas Domestic Demand - Chinas Internal
Economic Development - Chinas Roles as the
Center of Global Supply Chain Decoupling of
Worlds Real sector Economy From the US Economy
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- Less Dependent on USs Imports - Less
Dependent on USs Exports Less Dependent
to US Dollar