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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (14274)	2/10/2007 11:09:35 PM
From: energyplay	Respond to of 218167

The Central Banks have lots of leverage that way, but they can also multiple their leverage by leaning on the big commercial banks and brokers who lend to the hedge funds. Well known names like Deutsch Bank, Goldman Sach, Bear Stears, JP Morgan Chase, Bank of America, Nomura, etc. The central banks can lean on the prime brokers for the hedge funds, who extend the credit to the hedge funds based on a risk assesment for the whole portfolio. If the Central bankers or the bank examiners (In the US Comptroller the Currency usually) indicate that short Yen positions will need to be evaluated as riskier in the near future, the prime brokers will communicate this to thier hedge fund customers. If the banks & prime brokers push back, the bank examiners have a huge stick with the capital adequecy requirements of either Basel 1 or Basel 2. Don't ask me to explain either Basel regualtion, they are so complex my head would explode. ***** Since most hedge funds don't want to contract the size or leverage of their portfolios, they will look for something else to short if they can't short Yen....preferably something with low interest rate... Suggestions ? US Dollars or short term treasury Bills ? UK pounds ? Google stock ? Question for everyone - what would you short ?

To: Haim R. Branisteanu who wrote (14274)	2/10/2007 11:35:21 PM
From: elmatador	Respond to of 218167

Blame countries with high interest rates for carry trade. Countries such as Brazil, keep an interest rates high to attract money to fund the public deficit. Why the G7 do not lambast Lula to keep interest rates too high?

To: Haim R. Branisteanu who wrote (14274)	2/11/2007 12:05:24 AM
From: elmatador	Read Replies (1) \| Respond to of 218167

Who’s hurt by cheap money? The British! They aren't in the Euro to profit from handling money from currency to currency and they are good at it. And I have nothing against making money. With capital spreading more evenly, the British cannot charge what they used to, for a product that is widely available. Japan is flooding the market with capital. The British, however, are salivating for a flight to “quality”, where by a crisis in a poor country triggers capital flight and they gorge in moolah. But continuing like this carry trade status quo, pretty soon the British will have to think about working and making stuff to earn a living. They are taking a cut of every money that moves from place it is plenty to places where it is scarce. This is not longer a way to make a living.