At this time, Japan would not risk another domestic meltdown after what they went through to recover from the Asian Crisis and other market shocks, which means that in the near term there will be no drastic changes to the current monetary policy. While these near zero interest rates may not be in place forever, the fear and overreaction gripping the market should now be taken with a grain of salt. The panic selling has finally dissipated and the overleveraged have received their margin calls. The only question left to answer is, “Who will profit from the next upward carry trade wave?�
Submitted: Aug 16, 2007
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View Article: http://www.thefinancialwhiz.com/2007/08/16/the-death-of-the-carry-t...
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Comments Received:
Excellent follow up to my previous post. I don't disagree and hope that you are right. I personally believe the market pessimism has gone too far (read my article on Marketwatch). I posted this question on your site also: how do you know the most vulnreable carry trade positions have already been unwound? Will the rising Yen put any more stress on borrowers in the US or do you think that's fully played out?
Posted: Aug 17, 2007