Has Japan been fueling bubbles on a global scale?
Posted by Matt Dioguardi on September 21st, 2007
Here’s an interesting statement from an opinion piece in the Asahi discussing Japan’s low interest rates:
There is, though, no denying that Japan’s unprecedented super-loose monetary policy since the banking crisis in the 1990s has contributed to the global investment booms bordering on speculative bubbles.
September 21st, 2007 at 1:36 pm
This is a big one to tackle in one comment, and I’m sure that others will be better clued in on it, but we know that borrowing in low-yield currencies to invest in higher yielding ones will eventually fail. In this case, the BOJ may be providing opportunity for low-interest yen, and the yen sellers may be driving the price of the yen down, but eventually it has to end, and the trouble is that investors tend to get carried away with the greed of the trend and not be able to pull out in time. Not to mention, when billions of yen are lent in order to leverage big investments, these are the risk-management decisions of investment bankers, not the BOJ.
September 21st, 2007 at 1:45 pm
The following video is pretty amazing. In it Greenspan basically says, yes central planning is good for the value of money, and that subjective impressions of what inevestors are thinking is the best way to set intrest rates. Well, something like that … watch the video. It didn’t exactly leave me laughting …