Thursday, 18 August 2011

Is it A Liquidity Trap?‎


I am not an economist or pretend to understand how the markets work. I am a simple person who invested in equities and mutual funds directly and through financial advisors and ended up losing a lot of money under both scenarios. I start my morning watching business programs on CNN, Bloomberg, CNBC and BNN to try to understand what’s going on in the financial markets .All what I hear these days is explanations  of why the financial markets are plummeting. There is no shortage of excuses!! I honestly do not understand why stock prices are falling when most companies are doing well and full of cash!

Today, I heard one of the commentators (I think on CNN) saying that we can blame what is happening on the “liquidity trap”! He said that individuals have money but not spending it because they want companies to hire people. On the other hand, companies have money, but won’t hire people unless they start buying their goods and services. He did not offer any solution on how to break this deadlock!

My solution is to switch off the TV and forget all about my investment for a couple of years!!

The Future of Management Consulting

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