The carry trade bubble is about to explode – time to buy Japanese Yen
Joe Weinman
Oct. 3, 2007

The next bubble that is about to burst is in the carry trade. Many traders are taking very low interest loans in Japanese Yen. Then they sell the Yen to get access to Euro, Swiss Frank, Aussie and Canadian Dollars, British Pound, and US Dollar. They buy stocks with a hope that the emerging market profits will take them to heaven.

The emerging market especially in India and China are showing signs of crash. The rash can be similar to that in US in 1929. The ensuing depression in the emerging economies will take these economies into deep depression. The carry trade initiatives and norms are about to explode in the face of the traders.

When that happens, these same traders will unfold their positions, buy Japanese yen back and repay their loans – calling it ‘enough is enough’. That is exactly what happens when human greed dominates crazy behavior. The excesses are brought down to its knees.

The carry trade bubble is about to explode – time to buy Japanese Yen
Joe Weinman
....these same traders will unfold their positions, buy Japanese yen back and repay their loans – calling it ‘enough is enough’. That is exactly what happens when human greed dominates crazy behavior.
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