There are a limited number of people and corporations with billions of dollars looking for a place to park it. And a limited number of places to put it. (The limited places to put it are in fact the source of the CDO market.)

I have to assume that there is a rough correlation between the amount of investable money in a country and the available investments in that same country. In general, rich people like to live where there are other rich people to hang out with.

So if international investment becomes a bit more expensive, won't that simply mean more money staying closer to home? And if I'm right that available money and places to put it are roughly matched up in each country, then the total investments in each country should stay about the same, just with more local investors and fewer international.

Yes, this is a huge oversimplification, and there are a ton of consequences. But people with money to invest are going to find a place to put it. If local options are the lowest-cost option, they'll take local.