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http://www.telegraph.co.uk/money/mai...6/cnmerr06.xml
Merrill sounds alarm on global liquidity
Global liquidity growth has fallen from a peak of 22% in 2005, to around 10% now, notes Ambrose Evans-Pritchard in The Daily Telegraph. “Mr Chaudry said the suddenness of the fall matters more than the absolute level, typically serving as a warning signal with a lead time of 12 to 18 months. It slid in a similar fashion in 2000, and before both the 1998 Asia crisis and the US Savings and Loan crisis in the 1980s.”
This is all happening at a time when global investors are more exposed to sudden shocks or liquidity drying up than ever before. For example, Tony Tassell in the FT reports that State Street Global Markets reckons that the carry trade (borrowing in a low-yielding currency - mainly yen at the moment - to buy a higher-yielding currency) “is approaching extreme levels.”
This is all happening at a time when global investors are more exposed to sudden shocks or liquidity drying up than ever before. For example, Tony Tassell in the FT reports that State Street Global Markets reckons that the carry trade (borrowing in a low-yielding currency - mainly yen at the moment - to buy a higher-yielding currency) “is approaching extreme levels.”
http://www.telegraph.co.uk/money/mai...6/cnmerr06.xml
Merrill sounds alarm on global liquidity
Global liquidity - the monetary juice that fuels the system - reached a peak growth rate of 22pc at the end of 2005, even higher than the 15pc peak just before the dotcom bust in 2001.
The rate has since plummeted to around 10pc, and may have further to go. Mr Chaudhry said the suddenness of the fall matters more than the absolute level, typically serving as a warning signal with a lead time of 12 to 18 months.
The rate has since plummeted to around 10pc, and may have further to go. Mr Chaudhry said the suddenness of the fall matters more than the absolute level, typically serving as a warning signal with a lead time of 12 to 18 months.