MASSIVE WORLD SPECULATION DOMINOS (about bubbles)

[NVMojo]

Although this is from over a month ago, it's an important read ...

March 20, 2006


Last year, many Asian and other foreign stock markets went up as much as 50%. There is a synchronized world housing bubble that is a very analogous follow on bubble from the Japan collapses in the early 90’s, and the Fed loosening following 911.

We had the tech bubble crash in 2000/1, and a have now a general US stock bubble that is yet to really pop. Right now, we are about at the same DOW level before the market collapses in 2001/2.

There is a massive US and Japanese bond bubble because interest rates are so low, and have been for over ten years, at least from Japan’s perspective. Japan has acted as a virtual central banker for the world, with their zero interest rates. That has caused both a multi trillion dollar value Yen carry trade (borrowing cheap yen then lending the money in the US for example for a net gain of about 3%). The massive Yen carry trade has also financed much of the world stock bubbles as of this point. Also, that money has found its way into the world real estate market bubbles through various forms of mortgage backed securities. This list is endless for the Yen carry trade.

For bonds, in general there is a huge increase in risk taking because interest rates world wide are so low. Fixed income investors like insurance companies, mutual funds and individual savers have no choice but to send their hard earned money into the under priced bond markets. There is no other place to get ‘safe’ returns.

more...

http://www.financialsense.com/fsu/editorials/laird/2006/0320.html

[cliss]

1. Thanks for posting this.

This is really important because it's not just the US that's dealing with its own "bubbles" here at home. It's world wide.

[NVMojo]

3. yep, and our economy is tied into worldwide markets not just Dubai

like Bush would like to believe.

[KoKo]

2. Kick and Recommend..........It's a good easy to understand read.......n/t