Michael Yorba
Newbie
- Messages
- 3
- Likes
- 0
Recently on our IPTV show "Commodity Classics" we discussed the many types of repercussions the current credit crisis has left us with. One such issue seems to be overlooked by the main stream media…. the dramatic decline in value seen in the currency of other countries. In 3 to 4 short months many of these currencies lost 14% to 45% of their value. Canada vs Japan 14%, Australia vs Japan 39%, USA vs Poland 34%, USA vs Mexico 45%, Euro vs Japan 21%, USA vs South Africa 31% just to name a few.
That is quite a hit to the bottom line and in my opinion; the next problem we could face is a cascading effect of Corporate Bond defaults starting with the longer term maturities in the weaker economies. As this occurs, I think we could start to see a repatriation of funds flowing out of the USD back to the country of origin to shore up at least the more solvent companies.
Living without credit liquidity for 4 weeks will put many companies out of business and only the strongest of the lot can anticipate assistance from their banks.
I sincerely hope it just stops at the Corporate Bond level and does not bleed into sovereign debt.
Considering we are in uncharted waters with the massive influx of cash/liquidity into the system, it's anyone’s guess if the current G-7/USA plan will work. One thing seems to be obvious about the direction we are headed and that is the fact that we are building the base for massive inflation, which no doubt will be followed by much higher interest rates.
When I say massive inflation, I mean that there is still a 60 trillion dollar problem out there and so far, only a 1 Trillion dollar solution. "The guys are going bear hunting with a switch".
Another issue we may start to deal with soon is market manipulation in the FX markets.
The FX markets may fall under the CFTC oversight soon, but not today!!! I have notice the FX markets are very thin and since one can leverage up to 400 to 1 in some cases we could experience a massive rally in the carry trades across the board. If a trader can legally manipulate a market in their favor and receive anywhere from 20% to 265% interest while actively trading then, Shucks... that's almost as good as selling a NINJA loan [no income, no job, or assets] to someone.
Michael Yorba
CEO
yorba.tv
That is quite a hit to the bottom line and in my opinion; the next problem we could face is a cascading effect of Corporate Bond defaults starting with the longer term maturities in the weaker economies. As this occurs, I think we could start to see a repatriation of funds flowing out of the USD back to the country of origin to shore up at least the more solvent companies.
Living without credit liquidity for 4 weeks will put many companies out of business and only the strongest of the lot can anticipate assistance from their banks.
I sincerely hope it just stops at the Corporate Bond level and does not bleed into sovereign debt.
Considering we are in uncharted waters with the massive influx of cash/liquidity into the system, it's anyone’s guess if the current G-7/USA plan will work. One thing seems to be obvious about the direction we are headed and that is the fact that we are building the base for massive inflation, which no doubt will be followed by much higher interest rates.
When I say massive inflation, I mean that there is still a 60 trillion dollar problem out there and so far, only a 1 Trillion dollar solution. "The guys are going bear hunting with a switch".
Another issue we may start to deal with soon is market manipulation in the FX markets.
The FX markets may fall under the CFTC oversight soon, but not today!!! I have notice the FX markets are very thin and since one can leverage up to 400 to 1 in some cases we could experience a massive rally in the carry trades across the board. If a trader can legally manipulate a market in their favor and receive anywhere from 20% to 265% interest while actively trading then, Shucks... that's almost as good as selling a NINJA loan [no income, no job, or assets] to someone.
Michael Yorba
CEO
yorba.tv
