Well people call this liquidity , some call it capital flows...external credit.Why this is such a huge problem is what people dont understand. Even if some plants a tree it takes time to grow.People should ask why is my stock moving up but they are always worried about it going down.The great Crash will even this out.
Now this also called carry trade.
Lets say u put 10$ of money into indian stock market....9$ is borrowed in USD so u pay 25 cents to this borrowed $ .
Now to this 9$ u add 1$ and invvestin indian mkts ...lets say u make a profit of 10%
so 10 $ becomes 11$ now pay back25 cents and u have 1.75$ so that is 75% profit ...
now thisis what is called hot money ...it doesnt care about fundamentals...though fundamentals are really mentals in a liquidity driven market....how can cheap money drive business or credit flows...
So this game will go on till people stop it .Iam afraid it will come with major panics...and people withdrawing cash out of banks .You break the trust of people they will break ur casino machine .
Going forward i expect another credit crunch which is atleast 10x times 2008 .It wont go away easily with another QE nonsense which they did .May be it is time for all fat cat bankers to learn farming .This will cause all those derivates and real estate implosion . Now the $ moves above 82 we will see how this money covers up their longs in asia and commodities..
GOld is a safety when it falls but it doesntmean people get into gold rush . there is a fair chance that gold is warning of what is coming .It will anyway after few year be real money and not toilet paper currency .
