ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

What I have learned recently that the recent fall on the financial markets is probably attributable to the unwind of some of the Japanese carry trade.

The question it raises for me is what interest rate are they borrowing at and who are they borrowing from and more importantly can I do it?

The correction was due to a .15% increase in the Japanese OCR to .25%. I am unsure if this was the reason for the appreciation of the yen as it is more likely to be temporary with people selling assets and buying yen to pay back their loans in a panic.

Are interest rates likely to go higher in Japan?

The Japanese government debt is $1.3quadrillion yen or $9.2trill USD

1,300,000,000,000,000 * 1% = 13,000,000,000,000 better check my calcs as it is easy to make a big mistake with this many zeros.

The government total tax revenue is $72trill yen or 72,000,000,000,000 so a 1% increase is nearly half the total tax revenue. How likely is it that there will be anymore significant rate rises?

[Panda-NZ-]

The casualties of Adrian and Luxon's engineered recession (the poor of course):

https://www.stuff.co.nz/nz-news/3503...cants-one-role

1000 applications per job. Reducing demand in the economy without doing anything about supply, rents and price manipulation by companies.

[Daytr]

What I have learned recently that the recent fall on the financial markets is probably attributable to the unwind of some of the Japanese carry trade.

The question it raises for me is what interest rate are they borrowing at and who are they borrowing from and more importantly can I do it?

The correction was due to a .15% increase in the Japanese OCR to .25%. I am unsure if this was the reason for the appreciation of the yen as it is more likely to be temporary with people selling assets and buying yen to pay back their loans in a panic.

Are interest rates likely to go higher in Japan?

The Japanese government debt is $1.3quadrillion yen or $9.2trill USD

1,300,000,000,000,000 * 1% = 13,000,000,000,000 better check my calcs as it is easy to make a big mistake with this many zeros.

The government total tax revenue is $72trill yen or 72,000,000,000,000 so a 1% increase is nearly half the total tax revenue. How likely is it that there will be anymore significant rate rises?

You really need to know what you are doing if you get involved in something like this and I would suggest that carry trade is pretty much over.
They were borrowing in JPY due to the very low interest rates comparative to the US, but then the Japanese Government unexpectedly raised rates right at a time when the US is looking to lowering their own. The exposure you have is FX and as seen recently this can move swiftly especially when there is a crowded trade.
The JPY & Nikkei have recovered circa half their losses so perhaps some have re-entered the trade, but I would be wary of another sell off.

[Aaron]

You really need to know what you are doing if you get involved in something like this and I would suggest that carry trade is pretty much over.
They were borrowing in JPY due to the very low interest rates comparative to the US, but then the Japanese Government unexpectedly raised rates right at a time when the US is looking to lowering their own. The exposure you have is FX and as seen recently this can move swiftly especially when there is a crowded trade.
The JPY & Nikkei have recovered circa half their losses so perhaps some have re-entered the trade, but I would be wary of another sell off.

I was just imagining a world where I could get free money. I am sure there must be some restrictions and risks.

https://www.stuff.co.nz/nz-news/3503...ke-it-cleaners

Be interesting to know what this aggrieved employees role at the RBNZ was. She is applying for legal aid so her income must be a bit less than Adrian's. Shouldn't really be a problem for Adrian he could just print up $30,000 and pay her out. We just have to keep believing that the money has some value.

[Aaron]

Front page of the herald was an article about cutting interest rates. All the bank economists are unanimous that it needs to be done urgently. Jarod Kerr from Kiwibank seems the most desperate. He is quite young so I imagine he also has a big mortgage and is relying on house price growth and inflation to make him rich.

I guess these are the people that need looking after

https://www.nzherald.co.nz/nz/cut-up...MSPI6CAAUJWU4/

$350,000 pa household income $1.1million mortgage costing $88,000 at 7%. Even if you said a third went in tax $115,500 and $88,000 on the mortgage how does the remaining $146,500 get spent.

I am surprised Tory Whanau was not demanding lower interest rates as she struggles with the cost of living crisis along with the rest of us.

Inflation is not growth but it does make rich people feel better and I guess that is what matters.

Jerome's cut rates with stock markets and house prices near all time highs, I am sure that is more than enough for Adrian to follow suit.

To quote Rabobank "Really? A 50 bps cut as a message that the economy is strong? So if they cut by 75 bps the economy is booming? This sounds like something out of George Orwell’s 1984:

WAR IS PEACE

FREEDOM IS SLAVERY

IGNORANCE IS STRENGTH."