Realistbear Posted March 15, 2006 Share Posted March 15, 2006 http://www.thestreet.com/comment/investing/10273589.html It's officially over. After 15 years -- yes, 15 years -- of no growth, Japan's economy is poised to grow by as much as 5% in 2006. After eight years of slowly but steadily falling prices, Japan can now smell a welcome whiff of inflation. And after years and years of 0% short-term interest rates, the Bank of Japan is widely expected to finish the year raising those same rates to 0.5%. So take a moment to cheer for the end of what has been called the lost decade in Japan. Then buckle your seat belts. We are lucky to have a few months advance warning on the greatest economic shift to take place in the past 50 years or so. The free money is coming to an end and it will impact the world markets. Especially those who have relied on low IR for "growth." Quote Link to comment Share on other sites More sharing options...
sammysnake Posted March 15, 2006 Share Posted March 15, 2006 and anyone thinking the second largest economy in the world won't change the IR's here are jokers Quote Link to comment Share on other sites More sharing options...
karhu Posted March 15, 2006 Share Posted March 15, 2006 Another great article and thread on Japanese interest rates and the carry trade that has kept the cheap money flowing is here: http://www.housepricecrash.co.uk/forum/ind...=24836&hl=carry Could it be that Japan has pulled off the most amazing monetary trick in history. Central banks are noted for cycling interest rates; they generate huge liquidity booms and then raise interest rates so they can cash in the profits cause a crash and then buy everything back at knock down prices. Japan gave away essentially free money, got us all addicted to it and then will start charging us for it. That is going to hurt, but we're all so addicted to it that we're going to pay through the nose. Could Japan cause an economic crash in the West that essentially hands over control to Asia, which we know will happen at some point in the future? Quote Link to comment Share on other sites More sharing options...
karhu Posted March 15, 2006 Share Posted March 15, 2006 Japan has enabled the entire global economy to consolidate their debt to a 0% credit card and it's run up a huge debt. Now the offer is about to end. Quote Link to comment Share on other sites More sharing options...
nodumsunreader Posted March 15, 2006 Share Posted March 15, 2006 and anyone thinking the second largest economy in the world won't change the IR's here are jokers Perhaps I should hold off investing long term for a while then. But then again, taking advantage of high UK IR's would be somewhat selfish bearing in mind that my gain would be the result of mass unemployment in the UK. I mean, an extra £5k a year in interest against all those people thinking they could by a house after the crash spending their time looking for a job, any job, gis a job, just so they can afford the next week's rent. Doesn't seem fair somehow does it? Quote Link to comment Share on other sites More sharing options...
karhu Posted March 15, 2006 Share Posted March 15, 2006 Perhaps I should hold off investing long term for a while then. But then again, taking advantage of high UK IR's would be somewhat selfish bearing in mind that my gain would be the result of mass unemployment in the UK. I mean, an extra £5k a year in interest against all those people thinking they could by a house after the crash spending their time looking for a job, any job, gis a job, just so they can afford the next week's rent. Doesn't seem fair somehow does it? You can't use fair and economy in the same logic - that's anthropomorphism. The economy is a result of a set of supply and demand forces that doesn't have a conscience. Once Japan is out of deflation the money supply will get tight, interest rates will be going up and asset prices will fall. It's a matter of when, not if. Quote Link to comment Share on other sites More sharing options...
Realistbear Posted March 15, 2006 Author Share Posted March 15, 2006 (edited) Seems to me that the US $ will be the safest haven when the IR begin to bite. The Fed will already have priced in most of the hikes whereas the EU and especially the pound will be left lagging (if Gordon keeps rates low or even goes mad and lowers the rates to win voter approval for his No. 10 bid) with the threat of a serious outflow of capital. IMHO, the big losers will be the assetts that have relied the most on cheap credit. House prices. There is a closing window of opportunity for BTLers and over-leveraged home owners to try to get out before the rates begin to rise in reaction to the Japanese tightening. Wait and everyone will be trying to do the same thing. Edited March 15, 2006 by Realistbear Quote Link to comment Share on other sites More sharing options...
karhu Posted March 15, 2006 Share Posted March 15, 2006 US$? You for real? Agreed. If you're so apocalyptic you'd have plenty of gold stashed away . Quote Link to comment Share on other sites More sharing options...
EmpiricalBear Posted March 15, 2006 Share Posted March 15, 2006 RealistBear is not the only one to suggest the US$. My favorite deflation economist Gary Shilling has been saying this for some time. Gold is just a bubble, or for the real doomsday scenarios. The dollar will be the best of a bad bunch... and Bernanke is already making the right sort of noises to suggest that it will remain so. Quote Link to comment Share on other sites More sharing options...
LBoots Posted March 15, 2006 Share Posted March 15, 2006 RealistBear is not the only one to suggest the US$. My favorite deflation economist Gary Shilling has been saying this for some time. Gold is just a bubble, or for the real doomsday scenarios. The dollar will be the best of a bad bunch... and Bernanke is already making the right sort of noises to suggest that it will remain so. Agree I would much rather be holding $ (which I am at the moment ) rather then Euros & no way would I want to be long on the £ Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted March 15, 2006 Share Posted March 15, 2006 In a time of uncertainty the US Dollar will look very safe indeed. The might and democracy of the US will be a haven for many and the US will simply begin to spend more internally thereby rejuvenating the US economy - perhaps the last time they have to pull of this trick but they will. Become a Trekker - believe in a 'bright' future for Mankind where we all wear pyjamas to work and have sex with fake people in holo suites! Quote Link to comment Share on other sites More sharing options...
BandWagon Posted March 15, 2006 Share Posted March 15, 2006 Seems to me that the US $ will be the safest haven when the IR begin to bite. Stuff the Dollar. Open a Yen bank account. Pop down to your local HSBC, passport, utility bill, and recent bank statement. 1% charge, and you won't earn any interest. I reckon that's a good deal right now. Quote Link to comment Share on other sites More sharing options...
karhu Posted March 15, 2006 Share Posted March 15, 2006 Very interesting views on this thread! Amazed that you give the $ such a high rating. I hold quite a bit in $ but that is just my diversified portfolio. I'm not expecting too much, just think that the £ is a waste of time at present. Quote Link to comment Share on other sites More sharing options...
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