The liquidity tide

Dangers of global liquidity glut are the same as the last crisis

The US Federal Reserve last week announced that it would modify its “secondary market corporate credit facility” — its corporate bond-buying programme — to buy up to $250 billion of (BBB or higher) corporate bonds directly as well as bond exchange-traded funds. This suggests that, in the developed world, the liquidity taps are nowhere near being turned off. Global equity markets raced higher in response. Importantly from the point of view of India and other emerging markets, the action of the central banks of the developed world has helped reverse the near-catastrophic outflows of capital, which were visible in the