Maybe I should point out this story to my lovely Japanese sister-in-law. I wonder how many ordinary British people, never mind women, do things like this to make money?
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Mrs Japan plays the currency marketsAugust 3rd, 2007 |
 7 comments to Mrs Japan plays the currency markets |
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“….do things like this to make money?”
In speculation you sometimes make money, and sometimes you lose… I suspect many of these housewives are cannon fodder for old sharks… But, let them have fun, why not ?
My uncle did this and ended up losing his house.
He was experienced in the markets as well, it was just a bad week and everything went wahoonie shaped.
I’ll pass, thanks.
It’s been provoked by Japan’s ultra low interest rates, they can leverage themselves up to the hilt.
Same sort of blip as the vast amount of buy-to-letting going on in the UK housing market. A bubble created by easy credit.
I suspect a lot of amateurs will get burned on that one too.
Japanese interest rates have been low for years – local people (male of female) were likely to seek higher interest rates overseas eventually.
The Japanese government central bank has been lending out money for little or no interest (for years) and this has had a knock on effect in the financial markets.
No doubt J.P. could explain it is much more complicated than the Japanese government central bank just creating money and lending it out (vast complex book keeping tricks) but it amounts to the same thing.
I am told that even now (so many years after the stock market and property market bubbles burst) some Japanese banks and other financial enterprises are still unstable – even by modern international standards (although it is hard to believe that they can be worse than British and American ones – how could anything be worse?)
Although it hard to make any rational comparisons when lending is not financed by real savings in most places.
Paul, no, I think your explanation is dead on. It is not really very complicated. It is all part of what has become known as the “carry trade”: you borrow money in a low-interest rate country like Japan and invest in a higher-rate one, like Britain or the US. Result, the pound goes up, and lots of Japanese savings are attracted to places like Britain. Big hedge funds and other speculators have played this game for months; however, as and when the situation changes, as it will eventually, fingers will get burned.
Just so that people out there do not get the wrong idea, I think that anyone who speculates must follow the golden rule: never, ever bet more than you can afford to lose.
See the example of my Uncle.
Just for the record, there are lots of little ladies trading spot forex here in China, too. It can be done with remarkably little money these days, and if they’ve got the time to watch closely, they don’t ALL get burned. But it’s still a lot like roulette, and I suspect 8/10 of today’s players will be doing something else next year.