The liquidity crunch is not yet over: the insolvency crunch has hardly begun.
Repercussions will follow for the man on the street.
Yes, investors are jumping back into the stock markets, hoping this is just another routine shake-out – much like February 2007, or May 2006 – before the rally resumes. The `buy-on-dips’ orthodoxy dies hard.
And yes, speculators have renewed their leveraged bets on the yen and Swiss franc carry trades, borrowing cheap in Tokyo and Zurich to play global assets. The core belief is that nothing has really changed, that the world economy is still in rude good health.
Be very careful….