Monday, June 22, 2009


Bubbles past is bit of a topic today, so perhaps this is a good time to link to a short article concerning the next possible bubble:

What happens when the most powerful nation in the world, with a reserve currency everyone trusts and holds, decides to push a big credit expansion — again, at the instigation of our financial sector?

...You borrowed from the Japanese at 1 percent and bought anything outside Japan that yielded a bit more (including United States subprime mortgages). The coming American carry trade is the same thing: it weakens the dollar, lifts the economy out of recession through exports, and creates inflation that reduces the real value of our debts. Economix, NYT

That'll work! Wouldn't want to be holding that debt though.

At the end of the article, the authors ask if we are laying the foundation for a much larger debt crisis. We are gonna find out...

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