PT  - JOURNAL ARTICLE
AU  - Michael J Howell
TI  - The Cycle of Global Liquidity
DP  - 2009 Dec 21
TA  - Trading
PG  - 156--165
VI  - 2009
IP  - 1
4099  - http://guides.pm-research.com/content/2009/1/156.short
4100  - http://guides.pm-research.com/content/2009/1/156.full
AB  - Important macro-factors determine liquidity conditions in micro-markets. Capitalism is essentially a financing system, or more correctly a re-financing system. The re-financing process is largely controlled by Central Banks via their influence on the wholesale money markets. Financial liquidity tends to move in a four- to five-year global cycle. Periods of tight liquidity trigger financial crises like 2007/08. The modern-day banking crisis no longer involves queues of retail depositors scrambling to remove their savings whenever their bank lacks reserves. Rather it is caused by asset-liability “mismatch” and an inability to re-finance short-term liabilities in the wholesale markets.