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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (28073)	3/8/2005 11:06:31 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

China drains liquidity: Message 21113595

To: Jim Willie CB who wrote (28073)	3/8/2005 11:12:07 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

operate out of USA borrow Japanese money at 1.5% leverage with commercial loan at prime rate invest in USTNote pocket 300 bpt differential suffer small if any yen rise take home 100% at year end this is not short yen and long US$ this is leveraging 30:1 on the rate differential NOT THE CURRENCY DIFFERENTIAL futuresource.com Lets go back to January 03 You borrow Yen at 1.5% interest when the currency is is 1.20 I do not know what "leverage with commercial loan at prime rate" means Invest in 1 yr US treasuries paying 3% per year or whatever suffer HUGE when YEN goes from 1.20 to 1.02 over the course of the next two years. Pay back the YEN loan at 1.5% per year and suffer a 18% decline on the currency transaction and 3% on the loan for 21% So Yes, I do not get it. I am not trying to be stubborn but I do not see it. Take my example point by point starting with borrowing money at the begenning of 2003 with ratio at 1.20 and paying back the loan at the beginning of 2005 with ratio at 1.02 and show me how you overcome that currency differential when you go pay back the the YEN you borrowed to kick this all off. Mish