How Now Brown Cow?

Here's another article trying to explain what has happened. here

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  Two of the biggest culprits behind the rampant speculation in global markets are the Bank of Japan (BoJ) and the Swiss National Bank (SNB), whose lending rates are so low, that an estimated $330 billion of "carry trades" in yen and Swiss francs are swirling around the global markets. On Feb 28th, the BoJ's Atsushi Mizuno, pointed to the side effects of keeping low interest rates near zero percent. "It could cause distortions in global asset prices by speeding up capital outflows from Japan."

  
  

  And on January 24th, SNB Chairman Jean-Pierre Roth told the annual meeting of the World Economic Forum. "My current thinking on the Swiss franc, which is going against the fundamental elements in the Swiss economy, is that it's part of the exuberance in the financial markets," before vowing to crank up Swiss loan rates. The SNB started cranking up rates from near-zero in mid- 2004 to its current 2%.

  
  

  Interestingly enough, the latest plunge in global stock markets came on the heels of a hike in the Bank of Japan's overnight loan rate to 0.50%, its highest in a decade, and renewed warnings by Swiss central bankers of a tighter monetary policy in the weeks ahead, and threats of a short squeeze on speculators betting against the Swiss franc. Earlier, on February 10th, G-7 central bankers warned currency speculators that they could get burned betting in one direction against the yen.