The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: jimmg who wrote (76631)	12/26/2006 11:39:36 AM
From: russwinter	Read Replies (1) of 110194

<When someone borrows in yen, they need to sell the yen and buy another currency right? You can't buy US stocks with yen.> This occurs in the cross-currency market at the same time. The sell is a bookkeeping entry, the Risklove is now short. He does of course have a potential obligation to buy at some point. He takes the proceeds and buys whatever. Japanese institutions already have Yen assets, which they sell directly into the currency market. This is not a bookkeeping entry, but a real money transaction that shows up as a capital flow which moves out of Japan to buy US Old Maid Cards for example..

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