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Capital Wars

The Rise of Global Liquidity

Authors: Howell, Michael

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  • Explains why liquidity is a key driver of global economies and financial markets and its particular importance in modern debt-based financial systems
  • Discusses the roles of Central Banks, shadow banking and the growth of wholesale money on global liquidity
  • Looks specifically at the developments in China, which has become a major provider of funds to international markets
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  • ISBN 978-3-030-39288-8
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Hardcover $59.99
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  • ISBN 978-3-030-39287-1
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About this book

Economic cycles are driven by financial flows, namely quantities of savings and credits, and not by high street inflation or interest rates. Their sweeping destructive powers are expressed through Global Liquidity, a $130 trillion pool of footloose cash. Global Liquidity describes the gross flows of credit and international capital feeding through the world’s banking systems and wholesale money markets. The huge jump in the volume of international financial markets since the mid-1980s has been boosted by deregulation, innovation and easy money, with financial globalisation now surpassing the peaks of integration reached before the First World War. Global Liquidity drives these markets: it is often determinant, frequently disruptive and always fast-moving. Barely one fifth of Wall Street’s huge gains over recent decades have come from earnings: rising liquidity and investors’ appetite for riskier financial assets have propelled stock prices higher. Similar experiences are shared worldwide and even in emerging markets, such as India, flat earnings have not deterred waves of foreign money and domestic mutual funds from driving-up stock prices. Now with central banks actively pursuing quantitative easing policies, industrial corporations flush with cash and rising wealth levels among emerging market investors, the liquidity theory of investment has never been more important.

International spill-overs of these rapacious cross-border flows sets off capital wars and exposes the unattractive face of liquidity called ‘risk.’ As the world grows bigger, it becomes ever more volatile. From the early 1960s onwards, the world economy and its financial markets have suffered from three broad types of shocks – labour costs, oil and commodities, and global liquidity. Financial markets spin on fragile axes and the absence of liquidity often provides a warning of upcoming troubles.

Global Liquidity is a much-discussed, but narrowly-researched and vaguely-defined topic. This book deeply explores the subject by clearly defining and measuring liquidity worldwide and by showing its importance for investors. The roles of central banks, shadow banking, the rise of Repo and growth of wholesale money are discussed. Additionally, covering the latest developments in China’s increasingly dominant financial economy, this book will appeal to practitioners, policy-makers, economists and academics, as well as those with a general interest in how financial markets work.


About the authors

Michael J. Howell is a Managing Director at CrossBorder Capital Ltd. He founded CrossBorder Capital in 1996. Michael developed the quantitative liquidity research methodology while he was Research Director at Salomon Bros. from 1986. He was subsequently appointed Head of Research at Baring Securities in 1992, and was top-ranked ‘Emerging Market Strategist’ by institutional investors for the three years prior to setting up CrossBorder Capital. Michael has worked in financial markets for more than thirty years and is a regular international conference speaker. He is a qualified US Supervisory Analyst and has a Doctorate in Economics.

Table of contents (14 chapters)

Table of contents (14 chapters)

Buy this book

eBook $44.99
price for USA (gross)
  • ISBN 978-3-030-39288-8
  • Digitally watermarked, DRM-free
  • Included format: EPUB, PDF
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover $59.99
price for USA
  • ISBN 978-3-030-39287-1
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.

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Bibliographic Information

Bibliographic Information
Book Title
Capital Wars
Book Subtitle
The Rise of Global Liquidity
Authors
Copyright
2020
Publisher
Palgrave Macmillan
Copyright Holder
The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG
eBook ISBN
978-3-030-39288-8
DOI
10.1007/978-3-030-39288-8
Hardcover ISBN
978-3-030-39287-1
Edition Number
1
Number of Pages
XXII, 304
Number of Illustrations
1 b/w illustrations, 108 illustrations in colour
Topics