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You'll also find some historical reference to past liquidity crises, especially the Panic of 1907.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

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li