Global finance hits unsettled times

Discussion in 'Wall St. News' started by S2007S, Feb 23, 2007.

  1. S2007S


    WASHINGTON - Global finance is mysterious, exciting and sometimes reckless. A specter now haunts it - the specter of excess "liquidity." Will this prove a passing anxiety or, as in 1997 and 1998 with the Asian financial crisis, will it threaten the stability of the entire global economy? Good question.
    First, a vocabulary lesson: "Liquidity" is a common, but confusing, economic metaphor. Financial markets (say, stock and bond markets) are said to be "liquid" when it's easy to buy and sell. Transactions flow smoothly. By contrast, either buyers or sellers are scarce in an "illiquid" market. Prices move sharply, up or down. Markets can also have too much liquidity: investors may take increasingly large risks to put their abundant funds to use. "Bubbles" can form. Losses may follow.

    We now have evidence of that.

    article continued here
  2. "What's unnerving about the global money bazaar is not what we know; it's what we don't know."

    Word. :cool: