Faculty News
In an op-ed, Professor Nouriel Roubini discusses macro liquidity and market illiquidity following the 2008 financial crisis
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Excerpt from Project Syndicate -- "This combination of macro liquidity and market illiquidity is a time bomb. So far, it has led only to volatile flash crashes and sudden changes in bond yields and stock prices. But, over time, the longer central banks create liquidity to suppress short-run volatility, the more they will feed price bubbles in equity, bond, and other asset markets. As more investors pile into overvalued, increasingly illiquid assets – such as bonds – the risk of a long-term crash increases. This is the paradoxical result of the policy response to the financial crisis. Macro liquidity is feeding booms and bubbles; but market illiquidity will eventually trigger a bust and collapse."
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Additional coverage appeared on CNBC and MarketWatch.
Read more
Additional coverage appeared on CNBC and MarketWatch.