The risk of a big bubble
Risky investments form a new bubble
In brief: Where is it better to make investments in crisis? Risky investments are good only for a short time and only for desperate people who have nothing to loseA bubble is made for burst. But a bubble probably knows the time and the reason of its going down in history. It is a fact. You make a mistake supposing that the number of bubbles has been reduced. The mass rush in the markets of risky assets such as shares, oil futures and other raw-materials began in March, 2009.
At the same time the rate of USD suddenly fell down while the yield of state bonds advanced a little. The recovery of risky assets is also connected with the improvement of fundamental economic indices. We succeeded in keeping off depression and collapse of financial sector due to the massive monetary and fiscal incentives. Anyway the prices of assets are about to rise up gradually.
The world’s and the US economics particularly have begun being recovered little by little while prices of assets break all records presenting miracles of synchronous and rash rising up. In 2008 the prices of assets was falling down while the USD was rising up in value. But now they take their previous positions. Notice that prices of assets has risen up too early, too rapid and too high in comparison with macroeconomic fundamental factors.
So what is the reason of such rising up? The wave of liquidity formed due to low interest rates has also influenced this situation. But the most important factor to blow out this bubble in the market of assets has been devaluation of the USD while active development of the main speculative strategy “carry”.
Ukranian Globalist2009-11-17 14:25, Economics.
News on: exchange, oil futures, rates, United States