Monday, June 15, 2015

Ceteris Non Paribus, This Is Heading For Meltdown

Our fate is once again in the hands of PhD dumbfucks. The Yen has been "Risk On" for three years straight.

The 1997 Asian currency crisis was massively amplified by the Yen Carry Trade, by which cheap hot money from Japan was "invested" in Emerging Asian economies. When that all reversed literally overnight, the Asian economies were obliterated. The financial turmoil lasted a year and culminated in August 1998 with the Russian debt default and the collapse of Long Term Capital Management (LTCM) a single hedge fund leveraged 1000x and run by Myron Scholes 1997 Nobel Prize Winner for "innovation" in financial derivatives aka. WMDs. Leading to a massive global bailout by the IMF and U.S. Fed.

In (another) EM crisis, the Yen is once again fulcrum
Borrow Yen, Buy Netflix:
Yen/Dollar (inverted) with S&P 500

Close-up view of recent correlation between Yen and S&P:

PhD morons don't live in the real world, they live in a statistically simulated ceteris paribus fantasy land playing dungeons and dragons, with the fate of the planet at their dumbfucked mercy.