With the global financial and economic crisis, there’s scarcely anybody around the country who has not been touched in one way or another by its after-effects. The problem there at the epicentre of the crisis was a credit crunch arising from a lack of liquidity in the system.
The problem here is an excess of liquidity, coexisting back-to-back with a credit crunch affecting some sectors. There, governments have overborrowed, or are doing quantitative easing, making financial markets and bondholders nervous and demanding higher returns and driving up yields. Here, Government is not rolling over all its domestic maturing debt, making banks awash with cash, and driving down yields on treasuries.