Americans should be very concerned about their currency.
The unwinding of the Yen carry trade should have happened. The worlds financial elite have been shorting and leveraging up in Yen for 15 years plus.
But, instaed a bailout, Yen intervention.
Since Thursday, the Yen annd Dollar have fallen against the worlds currecnies, But, looking at the Yen/Dollar in isolataion, it shows a differnt story.
Nothing but Yen/Dollar up. Which means, the Yen up & Dollar down. Both are falling against the world, but the dollar is falling faster then the Yen.
The big boys (G7) are being allowed to roll their levergae from short Yen into short Dollars.
Great read, especially the first page. Read and share.
Crony Capitalism Strikes Again
"In any event, the yen intervention certainly had nothing to do with the evident distress of the Japanese people. What happened is that one of the potent engines of the global carry-trade -- the massive use of the yen as a zero cost funding currency -- backfired violently in response to the unexpected disasters in Japan.
Accordingly, this should have been a moment of condign punishment -- wiping out years of speculative gains in heavily leveraged commodity and Emerging Markets currency and equity wagers, and putting two-way risk back into the markets for so-called risk assets. Instead, once again, speculators were assured that in the global financial casino operated by the world’s central bankers, the house always has their back---this time with an exchange rate cap on what would otherwise have been a catastrophic surge in their yen funding costs."
