This article is taken from the Trader's Journal magazine (November 2008 issue)
The author, Adrian Ash, is the editor of Gold News and head of research at BullionVault. Adrian is the formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors.
- Adrian Ash observes how the expansion of money and credit through leverage has caused the inflation of speculative bubbles throughout history. He also discusses how the lack of credit or money and the removal of leverage can cause prices in markets to tumble
WANT TO KNOW WHY your stock market shares keep tumbling, right back to what one Fox news anchor just called “the absolute lows” from the end of last week?
It is credit – or rather, the lack of it.
The U.S. bailout, European unity, Gordon Brown’s sainthood, every new mortgage application...all of these things now look incredible – quite literally unbelievable – against the stark backdrop of no credit, no leverage today. But nothing lacks credibility like trying to make fast money in finance right now.
Even David Einhorn, the baby-faced card shark running Greenlight Capital, cost his clients more than 12% of their money last month. And he is the guy who spotted and bet on Lehman Brother’s looming collapse 14 months earlier!
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