Torygraph: Bernanke will make things a lot worse by repeating Greenspan's mistakes

chucky

!!!!!!? wrote: »

Ever hear of something called the carry trade? Once all the other major currencies start to cut their interest rates too, it doesn't work too well and the Yen appreciates.

Carry trades do not determine the FX market and probably not widely traded unless there are specific requirements.

In the current economic climate they are probably too volatile and risky but would be interested to know if this wasn't the case.

WTF?_2

chucky wrote: »

Carry trades do not determine the FX market and probably not widely traded unless there are specific requirements.

Right, so you're saying that the overall strength of the Yen at any given time isn't strongly affected by the Yen carry trade......
:rotfl:
:rotfl:

chucky

!!!!!!? wrote: »

Right, so you're saying that the overall strength of the Yen at any given time isn't strongly affected by the Yen carry trade......
:rotfl:
:rotfl:

nope, i'm educating you in what a Carry Trade is - but what I am saying is that you're starting to waffle and dig yourself deeper into a hole (again) about something that you have not got a clue about and are starting to cloud the issue a bit... you'll be getting personal and taking it off topic next... the current Yen Interest Rate will always make the currency attractive...

!!!!!!? wrote: »

Ever hear of something called the carry trade? Once all the other major currencies start to cut their interest rates too, it doesn't work too well and the Yen appreciates.

you're the one that came up with the Carry Trade by the way...

WTF?_2

chucky wrote: »

nope, i'm educating you in what a Carry Trade is - but what I am saying is that you're starting to waffle and dig yourself deeper into a hole (again) about something that you have not got a clue about and are starting to cloud the issue a bit... you'll be getting personal and taking it off topic next... the current Yen Interest Rate will always make the currency attractive...



you're the one that came up with the Carry Trade by the way...

So, to clarify, you're the Carry Trade had nothing to do with the Yen's former weakness and the closing of the interest rate differentials with other currencies had nothing to do with the Yen starting to strengthen again.

uh huh :rolleyes:

kennyboy66_2

!!!!!!? wrote: »

Ever hear of something called the carry trade? Once all the other major currencies start to cut their interest rates too, it doesn't work too well and the Yen appreciates.

I have heard of it yes, but the actual question was - apart from the Yen, which free floating currencies have strengthened against the US $ in the last 6 months.

I said this because you claim that of the US dollar "it's only the 'least weak' of a bunch of currencies that are falling from their pre-eminent positions."

chucky

!!!!!!? wrote: »

So, to clarify, you're the Carry Trade had nothing to do with the Yen's former weakness and the closing of the interest rate differentials with other currencies had nothing to do with the Yen starting to strengthen again.

uh huh :rolleyes:

we're talking current and most recent to be clear - as i said "In the current economic climate they are probably too volatile and risky"

WTF?_2

kennyboy66 wrote: »

I have heard of it yes, but the actual question was - apart from the Yen, which free floating currencies have strengthened against the US $ in the last 6 months.

I said this because you claim that of the US dollar "it's only the 'least weak' of a bunch of currencies that are falling from their pre-eminent positions."

Well, let's see - what are the major free flotaing currencies?

Dollar
Euro
Yen
Pound
Swiss Franc (arguably)
The Chinese renminbi is subject to the Chinese govt taking explicit measures to keep it artficially low against the dollar.

The dollar had already taken a pounding - remember$2 to £1 not so long ago.
Now sterling is getting a bashing.
At some stage the Euro will be next, and the Swiss Franc.
The Yen has been artifically depressed for years with super-low Jap interest rates for more than a decade and a carry trade springing up to take advantage of the difference between Japanese rates and the other major currencies. It looks set to rise.

Ultimately, of the Western currencies it's a total crapshoot as to which comes out 'best'. Probably the dollar as it has a strong base backing it, even if there is loads of US debt.

IMO it's the currencies of the East which will gain overall. Place which still, y'know, make stuff. Because at the end of the day, money is supposed to represent useful product in the economy.

WTF?_2

chucky wrote: »

we're talking current and most recent to be clear - as i said "In the current economic climate they are probably too volatile and risky"

I was asked why I though the Yen was strengthening despite mega-low interest rates. IMO it's due to the fact that it's no longer quite so much lower than the other currencies and the carry trade shows signs of unwinding. It has been artificially weakened by it over the last years.

setmefree2

!!!!!!? wrote: »

I was asked why I though the Yen was strengthening despite mega-low interest rates. IMO it's due to the fact that it's no longer quite so much lower than the other currencies and the carry trade shows signs of unwinding. It has been artificially weakened by it over the last years.

As I understand it theYen strengthened because of the unwinding of the carry trades In addition, last week many Japanese brought their money/savings home. Because interest rates have been so low in Japan many regular Japanese savers (of which their are many) started to buy different currencies to get a better return on their saving. Initially they saved in dollars but eventually they got more adventurous and started buying currencies from emerging economies. When these countries got into trouble and needed to go to IMF, the Japanese savers prompting brought their money home leading to a strengthening of theYen.

setmefree2

Thanks for this article. I have to say that I find it less than convincing. In particular this quote:-

"Really? The US still has a big inflationary problem. And now we have both a monetary and fiscal policy that is wildly expansionary. That could easily spark more inflation, despite the economic slowdown, undermine real income and prolong America's slump. "

Inflation? Where? 25% falls in HPs, 40% falls in stock markets, 40% falls in pension funds, the collapse of car prices? Please where is the inflation?

That could easily spark more inflation? WHAT INFLATION?