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

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To: Real Man who wrote (79956)	3/13/2007 11:33:27 AM
From: Tommaso	Read Replies (1) of 110194

When you say "carry trade" do you mean the Japanese who are exchanging yen for bonds in other currencies (mainly the $USD) that carry higher interest rates? I guess speculators in other countries can borrow yen and do the same thing. It's a foolish thing for Japanese to be doing with their money--in effect, selling their own very sound currency short--and unwinding these positions is bound to push the yen up far and fast. I don't dare try to play this situation for a profit; my idea is that I am lucky enough if I can just make myself immune to it. I understand that a lot of Koreans are long the yen. Nothing ever plays out the way it did in the past, but I think we are at a moment somewhat comparable to that when the failure of one bank in Austria set off a chain of financial contractions. I agree with you that if the Fed should try to stop it, and they very well might, the only outcome would be severe inflation.

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