The super liquidity in financial market pulled stocks, bonds, real estate and commodities up in the last six years – how long can it continue?
Paula Zaveri
Jan. 2, 2007

It started in 2001. Someone somewhere decided to print money. Other central banks followed. Borrowing obstacles were removed. Liquid cash poured in like liquid gold. Everyone started borrowing and ran with the borrowed money to buy all kinds of assets - stocks, bonds, real estate and commodities. The tax cuts across the world also helped. In China people started saying let us invest instead of saving the money under the pillow.

India, China and Brazil took the first step – the liquidity even increased more. The net effect is super bull markets in real estate, gold, commodities and stocks. The liquidity is so high that even though Fed raised interest rates relentlessly, the long bond rate hardly moved anywhere causing an inverted yield curve.

The million dollar question is – how long can it continue? How much air is left inflating the bubble of millennium? According to some smart investors the super liquidity can continue for many more years but sooner or later it will burst. Walking on thin ice may not be a great idea for long especially if you know the ice is getting thinner.

The super liquidity in financial market pulled stocks, bonds, real estate and commodities up in the last six years – how long can it continue?
Paula Zaveri
According to some smart investors the super liquidity can continue for many more years but sooner or later it will burst. Walking on thin ice may not be a great idea for long especially if you know the ice is getting thinner.
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The bears say bullishness goes too far – the bulls are going to buy stocks with all the money they have tomorrow 3rd January – where is Dow headed?
Sam Adelton
There is just one problem with such a total consensus of economists. Anytime all the economists agree on something, mostly the opposite happens. That means there is greater possibility bears are right this time!
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Housing market continues to slump – Lenar issues profit warning – Real Estate brokers going bankrupt
Fred Day
The Residential Housing market is getting worse. The builders are facing deflating pricing power loss. The buyers are canceling contracts.
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The benchmark Sensex ended more than 155 points, or 1.13 per cent, higher on the Bombay Stock Exchange on the first session of year
Media Release
The benchmark Sensex ended more than 155 points, or 1.13 per cent, higher on the Bombay Stock Exchange on the first session of year today on widespread buying by foreign and domestic funds.
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A last chance to buy US Dollar index as Euro and Gold rise based on hope of accelerated European Manufacturing Growth – German consumer strike of 2007
Fred Day
However, the reason for such demand is the 3% (three time normal) hike in Value Added tax in Germany starting in January 2007.
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The year starts with dealers predicting rate cut by Fed but a analytic models predicts something very scary
Sam Adelton
Stagflation will finally manifest itself when long bond yields will move up as Fed cuts the short term interest rates. That is the nightmare scenario. Stagnation and inflation can cripple the economy.
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