Reverse Diversification Responsible for Increasing Purchase of US Assets?

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Following months of recession in the United States, a sudden spike in U.S. asset purchases worldwide has occurred. BusinessWeek has some interesting commentary on why this might be happening.

“Reverse diversification” boosted global demand for long-term U.S. financial assets to a record as the European fiscal crisis may be beginning to translate into increased demand for dollar assets.Purchases of equities, notes and bonds totaled $140.5 billion in March, more than double economists’ projections, after net buying of $47.1 billion in February, the Treasury Department said today. Treasury purchases rose by the most since June as China, the largest lender to the U.S., added to its holdings for the first time since September.

This seems as likely an explanation as any.