Editor’s note: This is a lightly edited transcript of the accompanying video from professor Peter St. Onge.
Did Japan just break the world?
The central bank clowns who make a living torturing Japan’s economy have spent three decades stepping on every banana peel in the zoo. It looks like they just hit a big one.
In just two days, Japan’s stocks had their worst two-day decline in history—worse than the Black Monday crash of 1987.
Nearly one-fifth of the Japanese stock market evaporated. It would have been worse, but they halted trading with circuit-breakers.
The crash piled on U.S. markets, already in near panic over collapsing jobs reports.
So what happened to Japan? Why did it blow up so fast?
The key to Japan’s latest crisis is something called the “yen carry trade.” This is where hedge funds borrow yen and use it to buy U.S. treasuries or…
