As liquidity dries up stock market vulnerable to a worldwide crash soon
Peter Oberois
Mar. 4, 2007

The stock markets allover the world saw their worst in the last four years. Liquidity is drying upon America, China and India. All the three markets are in trouble. Other markets that depend on exporting to America are also in trouble. Japans Nikkei is also ready to start its new downward travel from the recent highs.

The lack of liquidity is caused by central banks raising short-term rates. In India, the stealth inflation was so high that the Government banned wheat and rice trading in the futures market. In China they are just concerned that the economy is exploding with little effects on the poor and rising gap between rich and middle class. In America, real estate loans are now seeing their bubble bursts. The mortgage defaults and stock market margin calls have created a liquidity shortage with massive redemptions in the stock, bond and gold funds.

The lack of liquidity will determine what will happen next. The markets worldwide are on the edge. A little tilt will make a free fall in the markets. The breadth of the market is worst ever recorded. The volume study says the smart is shorting the stock market since last November.



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