For years it is said that Japan, ever since the Plaza accord has propped up and provided cheap money for US, and propped up the latters economy for decades: 1. low if not zero interest, 2. cheap yen vs US dollar. And were also buyers of higher yielding US treasuries.
But lately Japan has taken steps on its economy and fiscal matters that others seen as an attack on US dollar or economy. (It could be because of Trumps tariff which is hurting Japan's export.!!)
1. They have hinted on raising bond rates (bond pricing hitting 1.9%)
2. They have stopped buying US treasuries
3. They are dumping US treasuries (almost $200+ billion for a quarter)
This affects:
1. Carry trade trades involving borrowing cheap yen and investing in higher yielding stocks and
treasuries. It is estimated to be between 12 -20 trillion dollars. Its unwinding
2. May affect liquidity
3 US economy stability as no one would continue to buy US debt
4. US quality of life. This sort of interest rate subsidy would end and jack up housing and
credit card % rate
All the while the environment of US economy is not at all conducive
The ongoing trend of de dollarization:
1. Declining importance of US as reserve currency
2. De dollarization by BRICS, USSR, UAE India in their trades
3 End of Petro and Euro dollars
4. US huge $37 trillion in debt
How will these affect the Philippine economy.?
Shall we weather these economic storms?
What are our countermeasures?
In this economic environment, how will you plan? How will you strategize? Its vastly different from the world we were born and grew...It will make your head spin
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