Friday, August 17, 2007

The yen carry trade — a “cheap money” borrowing ploy that may have financed investment in global risk assets worth hundreds of billions of pounds — is in danger of imploding.

Yen carry trade faces implosion as investors sell shares to return cash

The yen carry trade — a “cheap money” borrowing ploy that may have financed investment in global risk assets worth hundreds of billions of pounds — is in danger of imploding. Currency experts said that yesterday’s acute rise in the yen, particularly against sterling, the euro and the New Zealand and Australian dollars, was an “absolute” signal that the yen carry trade was unwinding — a consequence of the equity market turmoil spilling out from America’s sub-prime lending crisis. The yen carry trade — the practice of cheaply borrowing yen to finance investments across the globe — is thought by some to be the core of the massive worldwide liquidity pool that is now contracting so violently.

Posted by chris :-)) @ 07:42 AM (674 views)
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2 thoughts on “The yen carry trade — a “cheap money” borrowing ploy that may have financed investment in global risk assets worth hundreds of billions of pounds — is in danger of imploding.

  • Do we all remember when all the “experts” were insisting that sub-prime would be contained and not affect the wider economy of the USA? And now it’s not only affecting their wider economy, but every one else’s too! They weren’t just wrong, they were criminally wrong.

    I can kinda understand why “the massess” can be a bit dumb about these things and lead by a herd mentality, sentiment, etc, but when you’re paid to work these things out for a living, surely it’s gross incompetence/fraud not to look impartially at the facts and make unemotional, unbiased judgement calls? If we bloggers could all see what was going to happen, then why couldn’t these highly qualified brainiacs? And as for people that actually give any credence to the views of these so called “experts”, surely this is evidence (if any more were needed) for you to stop being such a dumbass – repeat after me, “they don’t know what they’re talking about, I must think for myself, they don’t know what they’re talking about, I must think for myself, they don’t know….”

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  • One of the best remedies for expert syndrome is direct exposure. A few dinners with the “experts” and you soon realise that it is time to start thinking for yourself. I can even remember the conversations I had when I was younger with experts in my field that left me shaking my head. That loss of respect was perhaps the most important part of my general education.

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