One of the primary problems faced by equity markets the last nine months is that they represent one of the few places on the planet right now where you can push a button and make billions of dollars appear in 30 seconds.
You can't say that about real estate, private equity, as well as lines of credit, etc. The world was awash with liquidity, artificially as it turns out, and now it isn't. Very abruptly.
Thousands of institutions are finding they have to generate liquidity somewhere to offset bad hedge decisions, redemptions, etc and, while they may be holding their noses while they do it, global equity markets are the desperate place they can at least make it happen.
That was the case with Caisse, the giant pension fund in Quebec in mid-November as an example when they needed to raise about $10 billion in a week and a half or thereabouts.
In events like this, it seems there is always leverage involved somewhere.
Cowperson
__________________
Dear Lord, help me to be the kind of person my dog thinks I am. - Anonymous
|