By James Howard Knustler
The stock market has stabilized after Monday’s major stumble — for now. Don’t sound the all-clear signal just yet.
Yes, the U.S. markets look temporarily stabilized… while the Bank of Japan suffered a major anxiety attack, declaring it would turn around the very modest 25 basis point interest rate lift that crashed their markets for three days by 20% — and also stated they would no longer even try to raise interest rates again.
That means the yen gonna crash — big inflation for Japanese people — so sayonara purchasing power. But it doesn’t just affect Japan. The bigger picture suggests that a gigantic armature of derivative bets rests on the yen carry trade.
The whole thing is a setup for an even worse bout of global financial instability. And just remember: The American on-the-ground economy is sinking rapidly. That’s real business and real paychecks and real trouble.