The 'Carry Trade' or 'Stoozing crack-smoker style'

‘Crack-addict stoozing’ or ‘stoozing on steriods’ is one way to describe the Carry Trade. It’s important at this point to realise that the carry trade knows no boundaries, and it seeps through literally millions of investments, from food to mortgages. What is the ‘Carry Trade’? Simply put it’s kind of like institutional stoozing (see previous post on stoozing). When you stooz you get a credit line of 0% or close to it (normally in the form of a credit card) you borrow all you can on it and put the money on deposit, when the 0% credit runs out you repay the loan and keep the deposit interest you earned. The same thing is being done with Japan, only in the billions, even trillions.

Institutions borrow money from the Bank of Japan at extremely low interest rates (at one point it was 0%!), typically below 1% and then they often leverage this money (borrow using it as collateral) up and invest in anything that might grow, in fact this practice had a lot to do with the worldwide credit crisis …

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The ‘Carry Trade’ or ‘Stoozing crack-smoker style’

‘Crack-addict stoozing’ or ‘stoozing on steriods’ is one way to describe the Carry Trade. It’s important at this point to realise that the carry trade knows no boundaries, and it seeps through literally millions of investments, from food to mortgages. What is the ‘Carry Trade’? Simply put it’s kind of like institutional stoozing (see previous post on stoozing). When you stooz you get a credit line of 0% or close to it (normally in the form of a credit card) you borrow all you can on it and put the money on deposit, when the 0% credit runs out you repay the loan and keep the deposit interest you earned. The same thing is being done with Japan, only in the billions, even trillions.

Institutions borrow money from the Bank of Japan at extremely low interest rates (at one point it was 0%!), typically below 1% and then they often leverage this money (borrow using it as collateral) up and invest in anything that might grow, in fact this practice had a lot to do with the worldwide credit crisis …

Read More →

Bubble Bubble, Boil and Trouble, Markets Quake and Markets Crumble

There is talk about the property bubble, and now an oil and gold bubble. Commodity prices have had a massive bull run, so will does this bull still have ground to cover? There is a real possibility the answer is yes… quite so.

Commodities have cycles like any other product, there are cycles such as ‘winter demand’ for oil, or a rise and fall as economies boom and bust, but then there are structural cycles that have to do more with supply and demand. There has been (for instance) a big upsurge in demand for oil but Opec have not increased output in order to meet the demand. The US Economy is slowing down (don’t use the R word!) and Europe is following, so if some of the major markets are starting to slow then what will that do to Oil or other commodities?

Oil prices in Euro’s prices went from €16 to €68 because the Euro got so much stronger against the Dollar, so is the solution to buy from the Iranian Oil Bourse which deals in euros? Supply …

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Do you need a 'Reality Check'? Property prices rationalise.

According to Britain’s largest property portal Rightmove.co.uk sellers need a ‘reality check’ when selling their according to a story published by Reuters. In the UK the unsold property stock has reached record proportions, currently it is seeing 35,000 per week come online, rightmove have about 90% of the property listed on the market on their site so it’s an even better indicator than our own versions which would be daft.ie and myhome.ie.

They have said that people need to embrace ‘smart pricing’, here we have taken to calling this ‘priced to sell’ or ‘price adjustment’ but in the end of the day the message is clear, drop your prices if you want to sell. The interesting aspect of the rightmove analysis is that many of the people advertising property are trading up and although they want to buy at a bargain they want to sell for the highest price attainable, its an interesting juxtaposition.

I think we are seeing the same thing in Ireland with sellers hoping for high …

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Do you need a ‘Reality Check’? Property prices rationalise.

According to Britain’s largest property portal Rightmove.co.uk sellers need a ‘reality check’ when selling their according to a story published by Reuters. In the UK the unsold property stock has reached record proportions, currently it is seeing 35,000 per week come online, rightmove have about 90% of the property listed on the market on their site so it’s an even better indicator than our own versions which would be daft.ie and myhome.ie.

They have said that people need to embrace ‘smart pricing’, here we have taken to calling this ‘priced to sell’ or ‘price adjustment’ but in the end of the day the message is clear, drop your prices if you want to sell. The interesting aspect of the rightmove analysis is that many of the people advertising property are trading up and although they want to buy at a bargain they want to sell for the highest price attainable, its an interesting juxtaposition.

I think we are seeing the same thing in Ireland with sellers hoping for high …

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Bear Stearns feels the bear, when in doubt ‘bailout’

Bear Stearns is toast. They have gotten money from the Fed (via) also JP Morgan Chase (who took them over), sorry, I meant ‘bailed them out‘ Bear Stearns became the financial equivalent of a drunken brother who was a hit and run driver, they fled the scene of their mortgage write downs and now JP is going to have to save their neck. Lehman Brothers is potentially facing the same issue.

If Lehman brothers are not in trouble then why do they need the 2bn dollar credit line? There is a credit crisis, but I think some of the firms out there are now facing a credibility crisis. The Lehman stock fell 40% in the last year. The underlying issue is property and leverage, there is a worldwide fall off in …

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Bear Stearns feels the bear, when in doubt 'bailout'

Bear Stearns is toast. They have gotten money from the Fed (via) also JP Morgan Chase (who took them over), sorry, I meant ‘bailed them out‘ Bear Stearns became the financial equivalent of a drunken brother who was a hit and run driver, they fled the scene of their mortgage write downs and now JP is going to have to save their neck. Lehman Brothers is potentially facing the same issue.

If Lehman brothers are not in trouble then why do they need the 2bn dollar credit line? There is a credit crisis, but I think some of the firms out there are now facing a credibility crisis. The Lehman stock fell 40% in the last year. The underlying issue is property and leverage, there is a worldwide fall off in …

Read More →