Thursday, August 2, 2007

Yen And Oil

The massive surplus dollars that oil rich countries have is also fuelling prices in stocks and commodities and other assets.

And with japanese economy doing practically nothing for the past one decade, they have no other option but to invest massive japanese savings in other countries assets. This coupled with extremely low interest rates in Japan is fuelling borrowers greed to borrow cheaply from japanese banks at the interest rate of 0.5% annually!

Large investment bankers from developed countries like U.S. and Europe have borrowed significantly from Japanese Banks and invested that money into riskier assets like stocks in India, China, Brazil, Phillippines, Russia etc. This has resulted in massive run in these markets and raised concern about bubbles in certain pockets of these markets. Like we have heard that chinese are now selling their homes in order to buy stocks!