Skip to main content

The 2007 liquidity crisis

Are we still in the midst of a liquidity crisis? Have certain segments of the financial markets become more volatile, or have some markets seized up due to a lack of ready cash and uncertainty?

These are some of the questions and issues explored in a recent article, "The 2007 Liquidity Crisis - Q&A".

According to authors Andy Sutton and Atash Hagmahani, the recent turmoil in the markets has resulted in an ongoing liquidity crisis, one the media would like most people to ignore. The authors explain their view of what's currently happening in the equity and credit markets, and give an overview of why the current liquidity has occurred.

You'll also find some historical reference to past liquidity crises, especially the Panic of 1907.

Comparisons between 2007 and 1907 have gained traction lately, as some observers find seem to find striking similarities between the two periods of financial fallout (no doubt they are also attracted to the analogy because of the 100-year anniversary between them).

Reactions to the Federal Reserve's response to the crisis are also found here. The authors are plain-spoken in their explanation of the Fed's chicanery and the likely outcome of their interventions: the creation of moral hazard. Certainly not the view you'll find from your local media outlet.

So give this piece a read, and forward it on to any friends and acquaintances who might need or want an alternative explanation of recent financial events. You'll find that the article provides a good overview of central bank responses to these events, and the authors definitely do not mince words.

Popular posts from this blog

Lessons from Hedge Fund Market Wizards: Scott Ramsey

Today we continue our series, "Lessons from Hedge Fund Market Wizards" , with a look at Jack Schwager's interview with Scott Ramsey of Denali Asset Management.  Ramsey, a futures trader and CTA who works on the island of St. Croix, spoke to Schwager about his first foray into the markets, his evolution as a trader, and the process he stands by to protect and grow his clients' money. 1) . Ramsey started trading in college. He was roped into the OTC metals market via a broker's ad in the Wall St. Journal. The broker charged customers a flat fee to buy and sell as much as they wanted in a particular market for six month. At the time, Scott was a novice and didn't know about futures, so he traded metals in this fashion through the inflationary run-up of the late 1970s. 2) . Scott had to rethink his trading strategy after he bought silver at $50 an oz., only to watch it collapse to $26 following a long string of limit-down days. He sold as soon as the market...

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...

How to "Pull the Trigger" on Your Trading Ideas

In our last post, I quoted hedge fund manager, Jim Leitner on the importance of following up on your investment ideas.  Today I'd like to follow up and share some thoughts on how you can learn to consistently "pull the trigger" on your best trading setups and investing ideas. In order to help you do that, we'll take from the best and offer up key insights from interviews with top traders and trading psychologists like Alan Farley, Brett Steenbarger, and Doug Hirschhorn .  Now before we get to their key insights on overcoming trading anxiety and pulling the trigger on your trading ideas, let's remember what Jim Leitner said in his interview: "Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's an interesting idea" only to find out a year later that the company you could've bought shares in is now up 500-fold. You never want to say woulda, coulda, shoulda...