Share
By now, you are familiar with the carry trade, where one borrows in one’s own currency in order to invest in higher yielding foreign assets, often times with significant leverage. The Japanese were famous for making this trade in Australian Dollars, U.S. Dollars, you name it.
What a lot of people don’t realize that everyone [...]

In the last few weeks, the currency market is where the action has been. We have witnessed massive moves in every major currency and in some not so major ones. To my mind, all of this is a prelude to some sort of currency crisis.

This crisis has been sneaking up on us as most of us have been transfixed by the U.S. subprime crisis and the subsequent credit crisis. For some currencies, it has been a sickening ride. The U.S. Dollar plunged to 1.60 to the Euro only to snap back viciously to 1.25. The U.S. Dollar plummeted to below 2.10 to the British Pound but is now above 1.60. All of this in the space of a few months.

But, it is in commodity and emerging market currencies where the trouble is brewing.

Share
While I am markedly more upbeat of late about economic matters, I still harbor some deep concerns about the direction of both the global economy and resultant political stability.
The Washington Post columnist Anne Applebaum has summed up my gravest fears about a global depression and its destabilizing effect on emerging market economies with this quote:
Political [...]

Share
Yesterday, I made the case for us to be less concerned about the U.S. and even Western Europe, but to be very concerned about a slowdown in Asia. The reasons for this are simple: most analysts now understand the extent of problems in the U.S. and Western Europe.
This, is part of the reason [...]

Share
Late last month, I made a big to-do about the Baltics becoming the next Argentina. Well, part of that mess is unraveling as we speak. Estonia is in recession and Latvia is headed for recession.
Read my translation of a Dagens Nyheter article from Sweden. The Riksbank, Sweden’s Central Bank, has reason to worry about Swedish [...]

Share
For those of you who actually care about anything international, there is an Emerging Markets crisis brewing right now in the Baltics. After reading posts from Alpha Sources, naked capitalism, Market Movers, and Bronte Capital on the subject, I started to think people actually cared about the tiny Baltics. So, let me add [...]

As I have said in prior posts, I am a bit of a eurosceptic. It is my view that the Euro is a political construct just as the expanded European Union has been and just as the reunification of East and West Germany on a 1 for 1 currency basis was. When politics come before economics, bad things happen.

And so it is for Ireland. But is the bust actually the Euro’s fault? And if so, is that a bad thing?