who makes money from equities and why is so much money chasing this field:
1) American domestic consumption fuelled by the housing boom ( now going into a bust). The boom was primarily due ot very veyr low interest rates which meant that you could buy houses. You sell those houses at a profit and consume the money.
2) who was providing the money for this.. the world is willing to, becuase they need a stable place to invest. which means that the us has a very high capital account deficit. ( their trade balance aint doin too good either coz of the higher oil bill)
3) so no one produces anything in america and the bank says so mcuh so that all debt values are known. so the money geos ot markets where there are lot of variables like in asia
4) hedge funds want alpha returns and this is available only in volatility :)
companies-> pvt placement
there are a lot of other channels for money to flow in and out.
will keep writing in