Monday, December 8, 2008

Economic Crisis, Liquidity Crunch and Cash Bubble

Wait for few months more and you will see growth. Growth in all quarters be it stock market, or the economic activity. Its not because everything that has gone wrong for last one year in US is getting back, and also not because World governments have been doing a lot to being economy back on track. But because of one evil that exists now-- CASH BUBBLE.

We have been hearing about people selling whatever commodity they have. From stocks to metals, from houses to currencies everything is being sold. But if you consider the principle of Trade, is it possible to sell without people buying it? No right!!
Even if we consider it is possible, if people are selling in such an huge extent and not buying, where the hell they are keeping the money? Banks!! No way, all banks are facing liquidity problems and it is understood that people are not parking their cash in Bank too. They are just keeping cash with themselves.

This phenomena has increased also because of many market analyst suggesting people to keep cash at times of crisis. This is a good suggestion, but is cash a commodity whose value remains same? No. People are forgetting this fact. But thats fine, I am not discussing that today.

I see all of my friends to relatives, from employees to organizations all are saving cash. Ofcourse this do not include who are not able to finance their own operations, but the others who have good disposable income. They are not spending or investing.
Above it, governments are printing more and more cash. From US to EU, from China to Japan, and from India to Kuwait everyone is pumping money to the World economy. But still economy is not growing and consumption of products are coming down. Where the hell is the money going? I am surprised!! Are you also??

Well I found the answer, money is in the hands of people. Banks and Govts don't have it. This has in one side created a cash crunch, and the other side CASH and DISTRUST BUBBLE. Its just few months for it to burst, and then we see a lot of economic activity around. After all none of the recessions have remained for more than a year and this too will not remain for long.

If you have cash, then today is the time when you will have to invest. ICICI Bank share is at Rs 300 or Cisco share is at $20; chance to own huge number of these high value share may not come again. I expect there will be at-least 100% increase in stock prices of these sound functioning companies. Don't be late, just buy it and be patient for the cash bubble to burst. Move early and be at the top. Or wait for others to join in and get lost in the crowd. Choice is yours.


Lokesh Awasthy said...

Reminds me of PNB Cheif's interview some days back, and look at ADAG they have got some really ambitious plan lined up already. And all is being done when the so called "recession" is upon us.

Interesting times, getting even more!!

Bhupendra said...

Yeah Lokesh, Economic crisis is crippling and life is getting difficult; and at the same time most of the promoter groups are busy increasing their stakes in their group companies. Next year is going to be really interesting!!


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