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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (44804)11/5/2005 12:28:26 PM
From: UncleBigs  Read Replies (1) of 110194
 
<<<This liquidity will continue to mitigate the tightening influence of rising U.S. mortgage rates, in the process prolonging the inflationary boom and delaying the desperately needed adjustment process.>>>

The liquidity Doug Noland is referring to is the Euro/Yen carrytrade.

I disagree that the carrytrade will mitigate higher mortgage rates and prolong the inflationary boom. I fail to see how a cross border carrytrade does anything to extend the housing/remodeling/consumption binge in the U.S.

When home prices stop rising and Americans are unable to spend the equity in their homes, our economy falls apart. The cross border carrytrade is entirely insignificant to this process except that it's unwind will tend to exasperate the problem as money exits the US dollar.
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