Friday, February 09, 2007

It's A Low, Low, Low, Low-Rate World

Money is cheap. And some experts say it could stay that way for years. That's creating opportunity—and brand new risks.

In some ways, it's the 1990s all over again. Back then, the info-tech boom created an unexpected boost in productivity that persists today. Now it looks like something analogous has hit the global financial markets. A combination of globalization, innovation, and good old-fashioned competition among markets has made it easier and cheaper to raise and deploy money. Borrowers now can draw funds from around the globe. And derivatives let financial institutions and traders manage their risks with mind-blowing precision. With Chicago, London, New York, and Frankfurt all jostling to be the world market leader, exchanges and financial institutions have an incentive to be cheaper, faster, more innovative.

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