Thursday, Feb 22, 2007
Huh? How about Yen falls because BoJ didn't raise rates soon enough?
FT.com: Yen falls as BoJ raises rates
This is because the Japanese Economy is still being pummelled 15 years (FIFTEEN!) after drinking too much "Houses can never crash" Kool Aid. This means that the smart move is to sell Yen and buy better currencies. This is our future if Crash Gordon stays the course. Except that they actually DO something.
"Currency analysts said the rate rise was unlikely to cause any let-up in the global carry trade, which has seen investors borrowing the Japanese currency to invest in higher-yielding assets elsewhere. Neil Mellor, currency strategist at Bank of New York, said the yen’s weakness was no surprise given that Japanese interest rates were set to remain low for the foreseeable future."
Posted by lvmreader @ 01:55 AM (206 views) Add Comment
3 Comments
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1. daft boy said...
Let this be an example to us all....god have mercy on our souls
2. Hongkonger said...
We are talking about negative equity, where house values fall below that of the value taken out as mortgage. In that scenario - which took place in Japan 15 years ago and Hong Kong after the Chinese handover in 1997 - people stuck with negative equity had to remortgage or sell their properties - so that banks could maintain their status quo. In Hong Kong's case, the government partly helped the negative equity property owners bail out financially. In Japan's case, those caught in the trap were left to fend for themselves,i.e. sell their properties or come out with another sum to top up the negative value.
That's why consumption is still weak in Japan even now because the poor Japanese had never recovered - nor forgotten - from the terrible, horrible crashes of both their property and stock markets following the property crash.
The euphoria now in the UK had happenned in Japan and Hong Kong before. And God be with us when the second part of that story is played out.
3. paul said...
This is not only our distant future, this is our immediate future.
Wait and see how the currency market bites a chunk out of Gordon's arse by sending the pound into a tailspin next time he slackens off on the inflation/interest rate upward spiral.
Oh yeah baby.