Watch an interview with Benjamin Tal on IE:TV.

We are currently sitting on a massive liquidity bubble that is a very real business opportunity for advisors, said a senior economist at one of Canada’s big banks this morning.

“This is a crucial point in your business,” said Benjamin Tal, senior economist at CIBC World Markets, during a presentation at the Canadian Institute of Financial Planners conference in Orlando, Fla. “You are sitting in a liquidity bubble of about $45 billion. This is just excess money sitting on the sidelines, collecting.”

Tal pointed out the marked pull out of equities in the last year. “Where is the money going? It’s going into money markets. Cash positions are rising at rates we haven’t seen before,” he said.

The economist noted that the Canadian economy saw a similar liquidity bubble in 1987, 1991 and again in 2001. The lesson learned from past experience, he said, is that people tend to sit on the cash for too long. He pointed out that the 1987 correction lasted just two months, despite elevated liquidity levels for at least 16 months.

“I believe that this is an important time for your business,” he told the hundreds of planners convened for the presentation. “Now is the basically the time to get this excess money back into the market. It’s when you can get business going.”

In 2001, investors aged 55 and older held the bulk of the cash. But this time around is different, Tal said, because a good chunk of the money (40%) is in the hands of younger investors (aged 35-55).

Overall, Tal said the vast amount of cash currently sitting on the sidelines presents an opportunity advisors simply can’t afford to let pass.

A true understanding of the subprime space in the United States is key to getting a handle on the problems in today’s volatile markets, according to Tal. “We are going through a major change in the psyche of the markets,” he said. “The numbers are not pretty, the picture is not really pretty.”

Housing starts south of the border are down 50%. Builders could, quite literally, stop building for a full year. Mortgage delinquencies have skyrocketed. Consumer confidence is down, as is consumer spending. These are just a few of the issues arising out of the subprime mess. “By far, by far, by far, the worst housing market correction in the U.S. in modern history,” Tal said. “This is not over. It is far from over.”

The CIBC economist certainly did not paint a rosy picture, but he emphasized the importance learning lessons and finding opportunities in today’s beleaguered economy.