Blog > US Stocks and Markets > U.S. Subprime Collapse: Blame the Japanese yen
 | Email This Article Email This Article  | 

U.S. Subprime Collapse: Blame the Japanese yen

Posted May 9, 2008

“So who - or what - is to blame for what’s being called the greatest financial crisis since the Great Depression? Strangely it’s all tied back to not only derivatives… but also the currency markets. Or more specifically, the carry trade.” — Jack Crooks

Blogger’s note: Jack Crooks sent a message out to his Sovereign Society readers yesterday explaining the carry trade and its connection to America’s dollar woes and the global markets. He followed up that article with a bold statement in today’s message: The Japanese yen has a staring role in the U.S. subprime crisis. If you’re unfamiliar with the carry trade, you can find Jack’s first article in our Investment Strategies blog. Or read on below to discover the connection between the yen and the American credit crunch.

by Jack Crooks

Baltimore – (TFN): As you know, this subprime crisis has both individuals and institutions scraping to keep their books in the black. And quite frankly, they’re barely managing.

Institutions from UBS (UBS: NYSE) to Citigroup (C: NYSE) have already written billions off their books. Earlier this week, Fannie Mae (FNM: NYSE) - the second largest U.S. mortgage lender - just recorded another $2.19 billion loss for the first quarter.

Meanwhile more than one-quarter million American homes are in foreclosure right now, and the number of new filings rose 57% in March alone! Insiders are saying this credit crunch is going to spread and force Americans to default on car payments, leases and credit card debt.

So who - or what - is to blame for what’s being called the greatest financial crisis since the Great Depression? Strangely it’s all tied back to not only derivatives - as I explained yesterday - but also the currency markets. Or more specifically, the carry trade.

Yesterday, I introduced you to the mechanics of the carry trade. Now let me introduce you to the quintessential carry trade currency, the Japanese yen and its starring role in the subprime crisis and the next Great Unwind. Read on to learn more.

****Make sure you sign up for our free TFN News Feed for breaking news, special reports and new financial videos. You can pick your favorite reader . Or if you prefer, you can have or free daily email delivered to your inbox .

Related Articles


Posted by Jack Crooks · Filed Under US Stocks and Markets 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus