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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 (28086)	3/8/2005 1:10:53 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

ok you want 5% per year in treasuries? Done! Jan 1, 2003 You borrow 30 million at 1.5% interest From 2003 to 2005 you make 5% per year in US treasuries You make $3 million (10%) Now you go and pay back 30 million. You lose 18% on 30 million when you go to pay it back due to YEN currency appreciation. You have to pay back 30 million + 5.4 million (18% conversion rate) plus another 3% interest on that (1.5% per year for 2 years; 3% of 35.4M = 1M roughly) Total payback = 36.4 million (in 2005 current US$ factoring in Yen appreciation). This is due and payable January 1 2005 when you are ready to takes profits (or losses). You borrowed 30 million You paid back 36.4 million Your return on the 30 million you borrowed = 3 million You lost 3.4 million on 30 million. Please!!! Can anyone else step into this and either tell me how I am wrong or tell Jim how he is wrong. Thanks Mish