Tuesday, July 10, 2007

The dangers then inherent in the yen carry trade, as the New York Fed Bank points out, is that the yen carry trade cannot persist indefinitely. At some point, the Bank of Japan is going to have to raise rates. At some point, they will need to contract the

The yen carry trade is continuously flooding the world with cheap money

NY Fed Reserve Bank issued an unprecedented public warning regarding the hedge fund industrywherein they made note of a variety of what I thought were interesting statistics. This was issued as a warning that the $17-trillion hedge fund industry, 93% of which is debt financed, or in other words,based principally on borrowed money derived from the yen carry trade,has created so many global credit and other speculative asset class bubbles that the principal driver of the global economic collapse scenario is and will be the hedge fund industryThe yen carry trade is continuously flooding the world with cheap money. It works by borrowing money at a half a point from the Bank of Japan and re-lending that money at a higher rate through some other instrument. Or by using it to purchase o

Posted by chris @ 02:18 AM (347 views)
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