The concern over liquidity seems fairly universal. Analysts and pundits have been sporadically warning about illiquid global markets from the United States to Kenya. The concerns have only escalated as commodity prices have dipped and anticipation of a rate hike from the Federal Reserve has risen. A team of analysts from Goldman Sachs' global macro research division tackled the issue in a comprehensive report published Sunday. They looked at whether global markets really were too tight, the consequences of illiquidity and potential remedies to the problem. A Real Issue While the concern over liquidity may be widespread, the understanding of what liquidity means is not as universal. Richie Prager, head of global trading and liquidity, described market liquidity as buying and selling an underlying security without unjust market disruption. According to Steve Strongin, head of global investment research for Goldman Sachs, "It's not that [people] can't get trades done." In fact, he said, volatility is actually lower in many markets than it was pre-crisis and bid-ask spreads are tighter. Instead, Strongin noted, the core complaint from Goldman clients has been that "they can't get trades done as quickly." He provided an illustrative example: "One $10 million trade that historically may have taken a day to get done now needs to be split into 20 (twenty) $500,000 trades that take a week or two to execute." Strongin said that this situation is "uncomfortable" for investors who operate under a 24-hours news cycle and can't keep trades up with the flow of information. Furthermore, he believes that arbitrage strategies that capitalize on rapid identifications market dislocations have been rendered almost obsolete. However, global liquidity troubles aren't just limited to equities markets. Goldman Sachs' co-head of global market research, Charlie Himmelberg, sees evidence of sluggishness in the corporate bond market as well – he highlighted strikingly low trading volumes. But Mary John Miller, former Under Secretary for Domestic Finance at the U.S. Treasury Department, actually believes that "current market conditions show plenty of liquidity, which is in part fueled by central... More