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Title: Switzerland’s ‘Katrina moment’ looms - Freak crisis could impair local economies Post by: Psalm 51:17 on June 13, 2012, 01:41:25 pm Switzerland’s ‘Katrina moment’ looms - Freak crisis could impair local economies 13 June 2012, by Michael Casey - New York (MarketWatch) http://www.marketwatch.com/story/switzerlands-katrina-moment-looms-2012-06-13-111033424 Excerpt: In times of crisis, it’s useful to think of international capital flows as floodwaters, or as mudslides. Just as Hurricane Katrina’s storm surge overwhelmed the levees protecting New Orleans, there is a point when the flood of capital is so strong that central banks can no longer protect their local economies. Whether their interventions are aimed at supporting a local currency or at preventing one from rising, the costs eventually become too great to continue with them. Even when it does work, intervention tends to divert the effect of flight capital onto other, underprotected countries. |