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One year later : what has changed ?

 Before the crisis in the stock markets erupted in its full glory in 2008, several alarm bells were endangering the financial markets. Until now the subprime mess has been seen by most as the most important reason behind the crash.
In my opinion several factors were at play these times :

1. Low dollar and its consequences : high oil price and high food prices

High oil prices strangled consumers. They also led to the haunt for alternative biofuels, which were leading to high food prices. Most of consumers money had to be spent at energy and food.

2. Fund rate difference between Japan and USA : carry trade

Investors were lending cheap yen to invest the money in higher renting dollars, contributing to the bubble in US assets.

3. China funding american debt

4. Subprime crisis with its mostly well known toxic assets

The unwinding of the subprime, but also high oil prices and food prices were the needles that punched the asset bubble, but in an important way helped by carry trades and funding of american debt

Actually many of these factors have changed dramatically

1. Low dollar : but in combination with low oil and natural gas price

This alleviates inflationary pressure

2. Inverse carry trade

Investors are lending cheap dollars because of low rate

3. China silently is shifting from shoulder. Recently they started a debt selling program in Rembini

4. Toxic assets are much less toxic for the moment and the market of toxic assets is much more liquid again.

I am to less an economist to set these factors in perspective, but it is my conviction all these factors have to be taken into account in assessing the actual state of the global trade (im)balances.