http://www.forexconspiracyreport.com/next-global-financial-crisis/
Next Global Financial Crisis
Which directions will currencies and economies go before and after the next global financial crisis? MarketWatch thinks that diverging strategies of central banks have serious ramifications and will be responsible for the next global financial crisis.
Since 2009, the key driver of financial markets has been liquidity. All asset prices have been affected by the central banks’ attempted reflation. According to one estimate, over 80% of equity prices are supported in some way by quantitative easing policies. Today, as much as $200-250 billion in new liquidity each quarter may be needed to simply maintain asset prices.
But now the world is entering a period where monetary policy will diverge between central banks. This has implications for both markets and asset prices.
In short the issue is what will happen as the USA stops printing so much money while the Europeans, Japanese, Chinese and others continue quantitative easing? After all about $60 trillion in global debt is denominated in US dollars. What happens if the supply falls while demand goes up?
When Liquidity Goes Away
Everyone, it seems, expects the US dollar to keep rising against other currencies, especially when the Fed finally raises interest rates. That will likely be a drag on the US economy as US products are priced out of global markets. The Telegraph warns of a liquidity drought and market bloodbath.
Evaporating liquidity and higher US interest rates will cause huge market swings with potentially catastrophic consequences, Institute of International Finance warns.
Investors face a “painful” adjustment in a world of evaporating liquidity and higher US interest rates that will trigger huge market swings with potentially catastrophic consequences, the Institute of International Finance has warned.
Timothy Adams, the chief executive of the IIF, which represents the world’s biggest banks, described liquidity as the “top issue” at high level meetings of central bankers, chief executives and other financial institutions.
He warned that the raft of regulation introduced in the wake of the 2008 crisis could potentially cause market gyrations larger than last October’s “flash crash” in US Treasuries.
If there is no credit businesses do not grow and economies suffer. The thinking here is that the fact that the US is no longer printing so much money is going to cause the next global financial crisis.
Long Term or Short Term on the Dollar
The US economy is still out performing other major economies and the Fed will likely raise interest rates. This will drive the dollar up in the near term. But what happens as European interest rates rise? Of particular interest is the Euro and trade between the USA and EU. However, Reuters reports on rising European yields
2. Which directions will currencies
and economies go before and
after the next global financial
crisis?
3. MarketWatch thinks that diverging
strategies of central banks have
serious ramifications and will be
responsible for the next global
financial crisis.
4. Before We Continue…
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5. Since 2009, the key driver of
financial markets has been
liquidity.
6. All asset prices have been
affected by the central banks’
attempted reflation.
7. According to one estimate, over
80% of equity prices are supported
in some way by quantitative
easing policies.
8. Today, as much as $200-250 billion
in new liquidity each quarter may
be needed to simply maintain
asset prices.
9. But now the world is entering a
period where monetary policy will
diverge between central banks.
11. In short the issue is what will
happen as the USA stops printing
so much money while the
Europeans, Japanese, Chinese
and others continue quantitative
easing?
12. After all about $60 trillion in global
debt is denominated in US dollars.
18. Evaporating liquidity and higher
US interest rates will cause huge
market swings with potentially
catastrophic consequences,
Institute of International Finance
warns.
19. Investors face a “painful”
adjustment in a world of
evaporating liquidity and higher
US interest rates that will trigger
huge market swings with
potentially catastrophic
consequences, the Institute of
International Finance has warned.
20. Timothy Adams, the chief
executive of the IIF, which
represents the world’s biggest
banks, described liquidity as the
“top issue” at high level meetings
of central bankers, chief
executives and other financial
institutions.
21. He warned that the raft of
regulation introduced in the wake
of the 2008 crisis could potentially
cause market gyrations larger
than last October’s “flash crash” in
US Treasuries.
22. If there is no credit businesses do
not grow and economies suffer.
23. The thinking here is that the fact
that the US is no longer printing so
much money is going to cause
the next global financial crisis.
30. The U.S. dollar hit its lowest level
against the euro since late
February on Wednesday after a
rise in European yields drove
demand for the euro and weak
U.S. data supported expectations
that the Federal Reserve will delay
hiking interest rates.
31. European yields continued to
climb, with 10-year German bund
yields hitting their highest levels of
the year at 0.6 percent
DE10YT=RR.
32. The rise alleviated concerns that
the yields could hit negative levels
after falling to a record low of 0.05
percent last month.
33. “It’s clearly what’s helping the
euro along here,” said Thierry
Albert Wizman, global interest
rates and currencies strategist at
Macquarie Ltd in New York, on the
rise in Bund yields.
