Some finance question (20點)

AUD dropped sharply by more than 30% since August 2008 as the investors' risk aversion heightened significantly after the collapse of Lehman Brothers and many investors lost confidence in the US financial system. Banks and investors leveraged to buy global stocks and high yield currencies since 2003. Leveraging means they borrow low yield currencies such as Japanese yen and US dollar and use those borrowed money to purchase risky assets and high yield currencies, they included global stocks and Australian and New Zealand dollar. They sold stocks and Australain dollar and repay the yen and USD loan. Thus, we observed that AUD and global stock markets collapsed, but the yen and USD appreciated. After this financial turnmoil, investors' confidence melt down. I think that in short term it is very difficult for global stock markets and AUD to climb up to previous highs. In long term, (5 years), they might get the chance to do so, as I think US economy will need 5 years to recover while China and other BRIC countries can recover faster than US, AUD can challenge its previous high.