[airstrip1]

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.

The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.

The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day. "The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC. http://tinyurl.com/zondz

This week's turmoil involving the Icelandic krona was just a brief squall preceding the storm to come. I do not think there is any way all these financial positions can be unwound without a major crash in asset values. There is a cerain irony that the Bank of Japan governor who is likely to be our nemesis goes under the name of Mr Fukui. http://tinyurl.com/ff5k9

[MrBill]

$this->bbcode_second_pass_quote('airstrip1', '[')i] One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.

The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.

The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day.

"The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC.

http://tinyurl.com/zondz

This week's turmoil involving the Icelandic krona was just a brief squall preceding the storm to come. I do not think there is any way all these financial positions can be unwound without a major crash in asset values.

There is a cerain irony that the Bank of Japan governor who is likely to be our nemesis goes under the name of Mr Fukui.

http://tinyurl.com/ff5k9

[Liamj]

Oh good. Could give demand destruction some teeth in the West.

[MrBill]

$this->bbcode_second_pass_quote('Liamj', 'O')h good. Could give demand destruction some teeth in the West.

[Liamj]

Bearish, presumably.
I'm awaiting the death of regional tourism with interest, hopefully there'll be some interesting properties shaken loose and we'll be able to swap our soon to be worthless paper & credit ratings for sound land.

[MrBill]

$this->bbcode_second_pass_quote('Liamj', 'B')earish, presumably.
I'm awaiting the death of regional tourism with interest, hopefully there'll be some interesting properties shaken loose and we'll be able to swap our soon to be worthless paper & credit ratings for sound land.

[Liamj]

$this->bbcode_second_pass_quote('', 'J')apans ends zero rates monetary policy
March 9, 2006 - 5:04PM.
The Bank of Japan ended a five-year experiment with ultra-loose monetary policy on Thursday and returned to a conventional interest rate regime, but said short-term rates would be kept around zero low for now. ...
The Age

[DesertBear2]

$this->bbcode_second_pass_quote('', '=')"Liamj My v.limited understanding says evaporation of credit will probably be calamitous, why would it not, i.e. how can the business press be blase? Is there some other source of easy money soon to appear?