Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: TobagoJack who wrote (35728)	7/4/2003 11:49:23 AM
From: gumnam	Read Replies (2) of 74559

Hi Jay It is extremely unlikely that Japan Cen Bank will let the debt situation get out of hand - but if they screw up these JGB yields keep going higher, we are looking at certain disaster in US. Japanese Institutions do not cut losses. When faced with a loss in one asset, they will as a matter of habit, culture and what not, cut their exposure to something else. Bond losses in JGB --> selling of UST --> repatriation of capital --> unwind of Euro/Yen, AUD/Yen, USD/Yen positions --> unwind of stocks all over the world including NKY--> widening of spreads in corporate sector --> further bond losses --> ...... Still a very low probability event, but the unwind trades are always faster and worse than anyone anticipates or expects. Life is tough but owning gold will be fun...... then we will also finally break this stupid Euro-Gold correlation as if Euro as a currency is any better than USD.... Anshu

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