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Inflation
October 30, 2006

Will there be asset bubbles globally?

Inflation

Global Cash Glut Fuels Investment Boom, Rate Concern

"Markets around the world are awash in excess cash, fueling a frenzy of investment from London to Tokyo that may lead central banks to push interest rates higher than investors now anticipate.

Money remains cheaper than in the 1990s even after every major central bank raised rates this year, the first simultaneous tightening since 2000. The cash glut is reheating the U.K. housing market, while in Japan companies plan the most investment since 1990. China's biggest bank this month attracted orders for more than half a trillion dollars with its initial public offering of shares.

``Interest rates in the main economies have still not been raised enough,'' says Tim Congdon, visiting fellow at the London School of Economics and one of the ``wise men'' who advised the U.K. Treasury in the 1990s. ``There is a buoyancy in asset prices one gets with high-risk monetary growth.''

Without further tightening, central bankers may have new asset bubbles and inflation risks on their hands."

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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