Quote:

Oh, and today I was polled by the University of Florida on consumer confidence and expectations. I gave it to them straight, long and hard.

Awesome

You nail my sentiment exactly. How could the populace be continuously coerced to buy risk in this country even as previous REALIZED risk has not been paid off?

This sort of management will lead to people taking more and more of their money out and just watch the market from afar, not encourage investments.

Interesting, especially when keeping in mind that almost all other countries in the world are keeping rates steady or are raising them - Australia, EU, China, even Iceland as I understand it.
Question is, where will that dollar carry trade money go? Back into Japan? China? BRIC? Other emerging markets? Europe?
Probably everywhere where interest rates are higher, indeed.

How about Iceland?

Once again thanx for the insight, I, like you, also am feeling the inclination to regurgitate.

KD how do I go about taking my U.S. dollars, and investing in Iceland? I heard their interests rates are arounf 15%. Keep up the good work by the way.

The US carry trade is a disaster for a number of reasons but the easiest way to describe it is that all investment capital moves OUT of the ZIRP country to other places that have a better return. And because our manufacturing base has been hollowed out, and our "financial innovations" found to be nothing more than scams, there really isn't a good reason for capital to stay here any longer, other than the US having a giant military where we can bully people into dollar recycling.

Speaking of which, I'm sure you guys noticed that the only dollar recycling that is going on any longer is from the petro-producing nations and NOT from the Asians anymore. Even the Arabs will tire of the endless games and won't want to continually throw good money after bad like they've been doing.

I just want to reiterate that the end-game for these hucksters is dissolving the GSE's in a manufactured crises of epic proportions, ****ing over the Asian and Arab bagholders and cherry-picking the assets out of the GSE debt pile for mere pennies on the dollar (as Stockmonger mentioned.) Nothing I've seen recently makes me think anything different about the end-game plan.

Marketpirate, this Icelandic bank even has a branch in your home town:

http://www.landsbanki.is/english/

I'll add a couple of key differences between Japan, when they became the carry trade funder of the world, and America.

1. Japan was a nation of savers, as opposed to the U.S., which is a nation of debtors.

2. Japan's population has been decreasing. Therefore, even with no GDP growth, GDP per capita continued to increase, ensuring no decline in living standards. The U.S. has a growing population.

Shoo,

But the US has many black guys and mexicans.
Et pluribus unum.

I am continually amazed by J6P and the government's wish to keep everything the way it is damn the future. It is a truly scary and sobering sight.

I have a question.
Is there any paper discussing and quanitifying negative effects of carry trade on Japanese economy in 90s?

Great ticker Kd, I do have a question, if we became a carry trade country, wouldn't people sell our bonds(ie short the currency) receive the cash and invest it elsewhere, my question, wouldn't our interest rates go up because the bonds are shorted(sold down)? Forgive my naivete.

Mrholty: they are our downfall.

What a lesson they are about to learn.

If the Fed's actions are going to continue to cause the dollar to plummet, then where is the safest place to park our cash to preserve our purchasing power? Are currency ETFs safe, or is there too much counterparty risk?

One thing that stinks about investing in foreign currencies, is that currency gain is taxable as ordinary income. If I understand this correctly, the same government that can cause the dollar to fall in value can then tax your "gain" on the foreign currency which was really due to the government's bad monetary policy.

The U.S. currency also weakened against the Australian and New Zealand dollars, favorite targets of so-called carry trades, as a rally in European and Asian stocks encouraged investors to buy higher-yielding assets.

http://www.bloomberg.com/apps/news?pid=n....

someone else posted this on another thread today. i tried to find who it was, but couldn't so sorry to whoever it was.

this guy, Heinrich Leopold, called the reverse of the carry trade a year a half ago. what he describes will happen sounds pretty accurate to me. he presents it from a more global POV.

http://www.gold-eagle.com/editorials_05/....

You are on a roll with the tickers this week - great job!

Not to worry, there's a well-documented lag of about 6 months between e.g. the European rates and the U.S. rates. Assuming that this is in truth a deflation scenario (which I also believe), then the looming collapse of the speculative commodities and oil bubbles will eliminate most of the inflationary pressure being seen by the non-U.S. central banks. Which will give them leeway to lower rates. Also, the flood of treasury supply the past two days suggests that the Fed + Treasury want to firm up a floor under the short end of the yield curve. I also suspect that much of the recent huge bid in short-term treasuries is tied into the deleveraging and quarter-end financial maneuvering/posturing, and may therefore go poof next week.

Bottom line: the current U.S. / Overseas rate differentials won't last, so the carry trade worry should pass.

[ Now, does my green star show up? I did a donation _and_ the impeachment petition... ]

Agree with This that and the other...excellent! Your ticker is becoming most succinct day by day. Precarious times have a strange way of focusing the mind of genius!

"Oh, and today I was polled by the University of Florida on consumer confidence and expectations. I gave it to them straight, long and hard."

So, did they finally cum to their senses?

Excellent ticker: one of your best IMO :)

Genesis wrote..

Oh, and today I was polled by the University of Florida on consumer confidence and expectations. I gave it to them straight, long and hard.

My first thought when I read that was that a TF'er must have prank-called Karl.

Did Japan have a huge demographics shift in their "lost decade"? If not, the Boomers retiring (or attempting to retire) will be another negative factor that will make the US worse off than Japan.