“What do you do if you want to get out of the yen carry trade? You have to sell assets. So, you are going to sit there and make a lot less money or even lose money, or you are going to dump assets to get dollars to pay back the yen loan? They are both bad for the markets.
It you have to sell assets, guess what? The price goes down, and other people have to sell assets.
The next thing you know it’s a stampede, and everyone is running for the exit.
This is not a few investment banks on Wall Street or a few hedge funds.
This is the whole world getting out of the leveraged exchange rate engine that has been running the world for 30 years. That is the financial equivalent of all out nuclear war.”
