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

To: jimmg who wrote (76631)12/26/2006 11:39:36 AM
From: russwinter  Read Replies (1) | Respond to 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..



To: jimmg who wrote (76631)12/31/2006 2:30:52 PM
From: Madharry  Respond to of 110194
 
I dont know if this is relevant but I own stock in a japanese company named aruze. they made a substantial investment in wynn a
us company. partially because of the appreciation of wynn and partially perhaps because of the depreciation of the yen, the companys investment in wynn is now worth more than the entire company. I wonder how many similar examples can be found amongst japanese companies.


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