Let Global Liquidity Be Your Guide For Next Crisis

Financial shocks have become an increasingly pervasive feature of the global economic landscape. Perhaps the most devastating aspect of these events is something economists call "contagion." Contagion occurs when an economic shock in one location reverberates in other countries, markets and sectors that have little apparent exposure to the initiating factors. The current global financial crisis and others, such as the bursting of the technology bubble in 2000, emphasize these linkages. But what starts this process is excessive liquidity.