I saw this guy on X explaining what happened earlier in the week with stocks and he explains the Japanese carry tradeI saw this guy on X explaining what happened earlier in the week with stocks and he explains the Japanese carry trade
Bro lays out what happened in reality vs what you see through the fake news
Mainstream media blamed Trump’s tariff threat over Greenland. But thanks to Bitcoin -- which trades 24/7 -- we can actually go to the tape.
So obviously nobody believes the news right! Bread and circuses and all that
Japan was actually the culprit, I'm no economist but I should know this
Japan’s original sin is when their easy money bubble burst in 1990, instead of letting weak companies and banks die off they put them on permanent life support with stimulus and low interest rates.
So usual story, the impending doom loop of currency collapse has been happening in Japan for decades and the usual story, is for the Japanese government to paper over the cracks and hold this thing together
So you're telling me the Japs have had near zero interest rates for decades?!!
Damn, so borrowing is the way, free money right, almost.
Hang on, so why don't we borrow money from Japan at 0% and invest in the US at 8%?!
Well shiiiiiit! That's exactly what the world has been doing since I've been asleep 😢
Overseas hedge funds and speculators borrow yen at zero and put the money into US asset paying 5% -- bonds -- or 8% -- stocks.
This is a total scam or total brilliance and my financial literacy is pathetic, which is why i should know this.
So hang on, why the problem with the stock market, what caused the crash
Japan’s new Prime Minister Takaichi called a snap election to beef up her party’s seat count ahead of a raft of reforms to slash taxes and hike government spending.
Ah ok, so cutting taxes and increasing spending when your economy is literally a bubble that has been trying to explode for 30 years is probably not a good thing
And that sent shockwaves across all these freeloaders using cheap Japanese debt to cream off the juicy yield in the US
The problem is Takaichi’s presser sent Japanese bond yields soaring to over 4% on the 40-year -- almost matching US rates on the 30-year.
This took nearly all the profit out of the carry. Which kicked off a big unwind.
Ah, so now the speculators are shitting themselves, they gotta dump the US assets, and pay back the Japanese loans before the investors get left holding the baby
Damn! I should know this stuff, and for the 30 years these wall st hacks have been creaming the system while adding to the debt burden