The Yen is often seen as a risk thermometer. And as of late is has been on the increase. In recent years international investors borrowed over one trillion yen (because it was at 0% interest) and they bought riskier investments with it, including US stocks the tides are now turning though, people are flogging risk and buying Yen. Hence the increase in its value. The worse things get the more it seems to go up.
Why? Because stocks and markets at the moment are not just volatile they are damn risky at best. Investment houses will always tell you its a great time to buy, what I want to see is a time when once and for all one of them will go on the record and say ‘folks, now is a lousy time to buy’. Whatever magical perma-happy pills they are on need to be more widely dispensed especially to skeptics like me. Anyways, all this lunacy still adds up to a stronger Yen.
People who say the markets are not in big trouble (at least if you want to argue with me) must first explain what they think would have happened if the fed had not cut rates and if central banks around the world had not unleashed billions and billions of euro/dollar/whatever into the markets. After that point if you have not already seen the error of your ways we can enter into intelligent dialogue, at which point I promise I will beat the error of your ways into you. Think baseball bat, think ‘the shining’.
We are all hoping (me included because I own stocks) that central banks will just bail us all out. I mean, honestly, I don’t want to have to face actually losing any money myself. I have just noticed that ‘myself’ contains the word ‘elf’, well Santa, send a few my way. Particularly if they can come in the form of booming markets despite the disaster area we see around us.
Prediction: The Yen will rise a lot more before all of this is done.
The cuts and scratches from the current worldwide financial mess are going to turn into festering gaping wounds… like the kind that when you see them give you that weird stomach feeling and a face that looks like you bit into an unripe lemon. Well, at least that’s whats happening to me.
Prediction 2: Some banks will actually have to close, I don’t think Northern Rock will be one of them, actually I am going to buy some Norther Rock stock because I think that given time they will bounce back, the U.K. Government stupidly vested too much in them to allow them to go bust. This is a good ‘blood on the streets’ stock.
Something to remember, when that Trillion in lending gets repaid, and the likelihood is that it will (in hard times you don’t shaft your benefactor – somebody please tell a few of my choice friends that) the yen will have to bounce even higher again.