The liquidity backdrop (and perceptions of prospective liquidity) turns increasingly prone to abrupt shifts. Liquidity over-abundance can quickly transition to waning liquidity. And once market perceptions begin to adjust to a deteriorating liquidity backdrop, the marketplace turns acutely vulnerable to the forces of heightened risk aversion, deleveraging, illiquidity, and market dislocation. This process has begun.
Doug Noland
Doug Noland: Last Gasp
A strong case can be made that we’ve witnessed the heyday in global speculative Bubble excess and resulting liquidity overabundance. Importantly, this liquidity onslaught has masked major festering problems – at home and abroad.
Infestation
The CEO of JP Morgan called them cockroaches. I’m not so sure. I think they are termites. Either way, they are swarming.