World Financial Crisis caused by the Quake in Japan
Mar 25, 2011
Here are a few statements taken from Jim Willie's latest financial article, commenting on the world-wide economic effects of the Japanese quake and tsunami. To read the full article, click on the link at the bottom.
Jim Willie writes:
The Japanese factor in early 2011 will turn out to be the most important factor to influence major global economies and the financial markets since the death of the US banking system in September 2008.
YEN CARRY TRADE CLIMAX EFFECT
- The trade was to borrow near 0% Japanese Yen and fund USTBonds and US Stocks for many years. Still amazing that many elite analysts have never heard of it. The Japanese situation hastens the fast retreat. The late sellers will be ruined.
- The reversal unwind of the Yen Carry Trade appears to be entering its third and possibly final phase. The unwind has required over 12 years to complete. The YCTrade took 15 to 20 years to build into the largest, most powerful, and significant financial engine of multi-$trillion phony wealth the world has ever witnessed. Japan might next face a liquidation similar to what the United States has suffered.
- The nation of Japan will not recover from the Yen Carry Trade unwind, which will be relentless. Its creation and sustained operation kept the Japanese Industrial Miracle going for three decades. It has finished, and run its course.
EMERGENCY FUNDS FOR SUPPORT
- Tremendous emergency funds have been appropriated and set aside by the Japanese Govt for financial market rescue & support. More funds have been devoted for relief efforts, worker crews, earthquake & tsunami cleanup, body retrieval & searches, and reconstruction. The price will be even larger than reconstruction & relief efforts. A total national meltdown is being averted, or delayed.
- The initial pledge of funds was for $86 billion, to stabilize their financial market, to make regional bank liquidity available, and to fund relief efforts. They reacted to factory shutdowns, a curtailment of distribution channels, and rolling electrical blackouts. The next pledge of funds was for $183 billion, to further stabilize markets and banks. The support continued until the latest total amount is reported to be 55.6 trillion Yen, equal to almost US$700.
- Compounding the current situation with flow of funds is the annual migration. The March 31st deadline approaches for the annual Japan Repatriation of cash held in foreign accounts. The requirement will add to the inflow of money into Japan from overseas.
- This annual return migration involves funds held in all foreign lands, and will force the calling home of funds from Europe, England, Asia, and the Persian Gulf.
- The effect will cause the Yen currency to strengthen relative to all fiat currencies, rendering harm to Japan's export industries. The world annually goes through this required effect, but this year should be more pronounced. Bad timing!