Good news for Japanese exporters: your currency is in shambles.
This is the biggest story never told, the experiment of negative interest rates that must work, otherwise, the very fabric of western finance will unravel. The 2% drop in the yen is the largest decline in 17 months. The working theory is for the Bank of Japan to take action next week, in light of the plunging sovereign yields that aren’t supposed to be happening.
“The market is seeing more scope for the BOJ to do something next week,” said Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas SA in New York. He cited recent news reports “suggesting there are discussions underway about pulling the trigger on further measures — that’s why the yen is weakening.”
Perhaps MOAR QE, or maybe a little economic stimulus spending is in order. Either way, the Bank of Japan must do something to stem the tide of deflation that is washing over its banking system. Some have even floated the idea of negative interest rate bearing loans. Could you imagine getting paid to borrow money to buy a home?
This is the upside down world we are entering in now. We are in the first inning of this new economic reality. Thus far, everything is going swimmingly.
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It’s already happening in Denmark where people with adjustable rate mortgages are getting paid to have a mortgage: http://www.wsj.com/articles/the-upside-down-world-of-negative-interest-rates-1460643111
It’s called rabbit hole down economics. Banks get paid to keep other people’s money deposited…house mortgagee gets paid a little less to keep banks money “deposited”. These guys are brilliant.
stem the tide of deflation in japan. where have i heard that before. how many times have i heard that before. haha japan you suck you fail and you die