Nikkei down almost 700pts now…..
The error in people’s thinking is that capital “rotates” somewhere when this sort of thing happens.
The error comes from the idea that there was actually capital invested. There was not. It was all credit — margin debt, specifically, especially in the FX and credit space, where such is rampant and leverage is ridiculous.
In that case the “money” does not rotate somewhere, it goes poof as it never existed.
It appears that our pals over in Japan have lost control. This is what central bank and government hubris lead to.
Bernanke is next.
NEW CRISIS THREAT LEVEL: Tickercon 1.