-- Published: Thursday, 12 February 2015 | Print | Disqus
By Graham Summers
The financial world focuses far too much on stocks.
Today, the market is roaring higher… for no real reason. Nothing substantial has come out of the EU talks with Greece. And the world has much bigger problems to deal with than Greece.
The US Dollar carry trade is over $9 trillion in size.
This means that over $9 trillion has been borrowed (in US Dollars) and plunged into various asset classes and investment projects around the world.
Greece’s GDP is $241 billion in size. Even if you add in the economies Spain, Italy, AND France, the US DOLLAR CARRY TRADE IS LARGER.
Again, if the US carry trade was a single country it’d be bigger than Greece, Spain, Italy, AND France combined.
When you BORROW in US Dollars you are effectively SHORTING the US Dollar. So when the US Dollar rallies… you have to cover your SHORT or you blow up.
And the US Dollar is rallying… HARD.
This move took out an entire industry (oil shale). That was just the beginning. Anyone who has borrowed in US Dollars to finance an investment or project and didn’t hedge their currency risk is blowing up.
This is just the start of a multi-year bull market in the US Dollar. The US Dollar has broken out of a massive falling wedge pattern going back to the early ‘80s.
No one will be safe from this. Commodities, emerging markets, all of them are at risk of severe collapses in asset prices. We are talking about a financial trade that is larger than the economies of Spain, Italy, Greece and France combined… blowing up.
Just like 2008.
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-- Published: Thursday, 12 February 2015 | E-Mail | Print | Source: GoldSeek.com