Yen Carry Trade just collapsed

[green-agenda]

This happened in August and caused the global credit system to seize up. It has just occurred again, in the last 30 mins .. but seems even worse this time.
http://finance.yahoo.com/currency/convert?from=USD&to=JPY&amt=1&t=1d

[medbiller777]

:scratch Ok...I saw the stock market tanked by almost 250 pts. today...how does this fit in? Unconfuzzle me!:hehee

[jds6958]

This happened in August and caused the global credit system to seize up. It has just occurred again, in the last 30 mins .. but seems even worse this time.
http://finance.yahoo.com/currency/convert?from=USD&to=JPY&amt=1&t=1d

ewww...gross...thanks for sharing, I just saw this info posted on another board as well...

[jds6958]

:scratch Ok...I saw the stock market tanked by almost 250 pts. today...how does this fit in? Unconfuzzle me!:hehee

Dollar is continuing decline against other world currencies...

[medbiller777]

Ok..thanks!:hug:hug Thats what I thought but I just wasn't sure! Thanks for all your input on these threads JDS!

[green-agenda]

:scratch Ok...I saw the stock market tanked by almost 250 pts. today...how does this fit in? Unconfuzzle me!:hehee

Each days billions of dollars are borrowed from Japanese banks where the interest rates are 0.5% and moved, or 'carried', to countries where they can earn much higher interest. For example in New Zealand you can put the money you borrowed for 0.5% in a bank and earn 6.75%. So the NZ dollar in overvalued because of this trade. When banks start get concerned about the ability of borrowers to repay these loans they lend less and the trade dries up. You can see the effect on the NZ dollar:
http://finance.yahoo.com/currency/convert?from=NZD&to=USD&amt=1&t=1d

Also when investors become concerned about liquidity problems and the value of credit assets (e.g. mortgages) they move money out of stocks and currencies and into safe investments. The safest being 10-yr treasury bonds .. you can see the effect of billions of dollars suddenly rushing for a safe haven:
http://finance.yahoo.com/q/bc?s=%5ETNX&t=5d&l=on&z=m&q=l&c=

The lower the return the greater the demand for these bonds. When the credit market seized up last August the Fed cut rates by 50 basis points in order to get the money 'moving around' again.

[Butterflykisses]

ut oh thinks we might be in trouble.

[George]

Nothing about this anywhere?!

[4JesusLove]

Your not supposed to know.:announce Its all hush hush. ;)