Quote:
Originally Posted by Teresa
Interesting idea, Felix. However, in the current extremely risk averse environment, which will last for quite a long time, what is left of the carry trade will keep unwinding, strengthening the yen for some time to come.
You may think the carry trade guys have long since unwound or lost their shirts and left the markets. But as long as there is capitalism and you are not in a deep recession or crisis, there are capitalists taking risks, i.e. borrowing money, often from the cheapst source, which is yen. The current environment is worse than a credit crunch, it is a systemic failure that is starting to result in worldwide recession or worse. We are in a crisis that will become a deep recession for several years, if not a depression. This is serious. Businesses will no longer be borrowing and investing, they cannot get the capital. The public is pulling their money out of investments anyway. The fed will be intervening some more of course, but the situation is still drastic.
That means death of the carry trade, down with Aussie and Kiwi, and the inevitable rise of the yen.
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Very Nice Call on the JPY pulling away!! ^..^