The Fallout and the Bailout.

I feel like I keep repeating myself, the crisis is related to property and leverage. Unlike the tech bubble the issues caused by property and leverage affect the financial systems much more than technology did. The degree of leverage in the system is astounding, much of the whole wealth of the world is currently ‘borrowed’ and that’s a very scary thing, at least for me when I dwell on it.

Some institutions are leveraged differently than others but in general commercial banks are leveraged at 10 to 1 so for every dollar they actually own they owe 10. Savings institutions are about 8.4 to 1 and credit unions are the same. Brokerage firms and hedge-funds are at 32 to 1. Be afraid, that means for every Euro or Dollar they have they owe thirty two! Is there any lender out there that would give you thirty two times earnings? If you average out all institutions you come out with an over all leverage of about 12 to 1.

But stop right there… this doesn’t include derivatives! and they are not …

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The Japanese Yen isn't finished with you yet.

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 …

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The Japanese Yen isn’t finished with you yet.

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 …

Read More