Simon Johnson has beaten Gorilla to the punch via a very informative post at Baseline Scenario.
While we’re all waiting for the toxic shoe to get unstuck from bank balance sheets (they’re raising capital furiously, coz they know the big losses have just begun), the dollar has replaced the yen as the new carry trade currency (borrow cheaply in dollars, lend profitably in other currencies, in this case Asian ones, as emerging markets are growing a bit).
Thus Wall Street speculation begins again, particularly in commodities. How else does one explain a 50% increase in oil prices when the global economy is essentially not growing, unless one believes, as no economist I know does, in super duper growth just around the corner?
The risk of course is the dollar might appreciate, just as the yen did. So the next bubble watch is on.
Gorilla advises: “Time to go long moral hazard again!”
