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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (15424)12/12/2008 1:19:36 PM
From: gregor_us  Read Replies (1) of 71400
 
I think it makes sense for corporations globally to start doing alot of their borrowings now, in USD. Instead of hedging out the total exposure, they could simply collar the upside risk to USD strength. In terms of carry, funding currencies are often thought of as being used merely for speculation. However, we could see a renewed flood of Yen and USD based corporate and sovereign borrowing.

In general, I see funding currencies as global credit cards. When the rates are low and risk is moderate, it's as though everyone's line of credit in the world has been increased.

I assume the FED has figured out by now that since they are all-in on their reflationary bet, the simply have to get the USD back to a weakening phase. Of course, there are risks in that.

I don't see a currency crisis just yet, with the USD. Actually, there is growing risk that the world reflates and then the true calamity unfolds in 2012/2013/2014.

G
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