Author Anil Selarka evaluates the aftermath of Japan tragedy of quake and tsunami. He deliberates on the options open to Japanese government and where it commits serious errors. He says that the best option open to Japan was to sell its dollar reserve and buy yen instead of just printing more and more yen which will cause most serious inflation. With Japanese government throwing almost 25 Trillion yen into the money market (equivalent to $ 300 billions), he says that this money will be up in smoke in just two days. The need of the hour for Japanese government is to indulge into tangible assets growth and its management, not paper trading like money market operations. He says that Yen contrary to all expectation will rise to 60 from 82 level against US dollar. With Japan possibly remaining absent at future treasury auctions in United States, the possibility of higher rates in USA is written all over it. If dollar weakens due to Japanese selling, Chinese the largest holder of US treasury are not going to keep quiet. They too will join Japan which may escalate the currency crisis. The author has written previous article “Enter the Second Stage of Financial Crisis” only a few weeks ago, which may become reality soon due to these unexpected events. The nature is supreme – the author says. One can not continue to suppress truth for a long time. Japanese were doing it for over 16 years, and it finally exploded with natural calamity. Read the article for major effects and economic fall out from Japan quake and following tsunami. The author has also penned a remarkable book “Sub Prime Resolved” which is perhaps the only book that provided total solution to the economic crisis faced by the United States and the world.
Tag: Interest Rates
Defrosting the Liquidity Freeze
The Author implies that if some standard or dogma does not work out for a long time, then it is time to abandone that standard. We carry hundreds of old beliefs that low interest rates promote the growth, GDP but ask Japan, did it work for them for 14 years in spite of having near Zero interest rate? Ask United States – did it work for them either for over 7 years during which Alan Greenspan brought down the interest rates on its knees without yielding any tangible result. Low interest rates fostered the derivative trades and toxic investment products that neither seller nor buyer understood. Author not only evaluates the reasons but also provides uncoventional solution to the present problem, Read the article which is written in very simple English without any jargons, in convincing and logical manner. Offer your comments, howsoever small, if you really liked the article. Other articels are found on the side bar. if you wish to download, use the download box for well formatted PDF files.