Gillian Tett, the blog’s favourite financial journalist, highlights today the rampant speculative behaviour in financial markets around the world.
Quoting a senior banker, she notes that “highly leveraged short-term trades are back in vogue“. She adds that “traders feel stupid if they don’t leverage up“.
The basis for the speculation is that “central bankers have poured huge amounts of money into the system that is frantically seeking a home, because most banks simply do not want to use that cash to make loans“.
The results can be most clearly seen in China, where mainland property prices have soared 73% so far this year. Even the property bubble in the West never saw prices rise more than 30% in a year.
The blog shares her “sense of foreboding” about how it will all end.