Mother Of All Carry Trades...

... faces an inevitable bust

by Nouriel Roubini - November 1st, 2009 - Financial Times

one day this bubble will burst, leading to the biggest co-ordinated asset bust ever: if factors lead the dollar to reverse and suddenly appreciate – as was seen in previous reversals, such as the yen-funded carry trade – the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments.

Why is it that so many of America's Wall Street geniuses cannot see that trends do end. They failed to believe it in 2008. They are once again betting that they can keep beating the house and there will never be an accounting. Last time the U.S. taxpayer bailed them out. They are counting on that again. They do not seem to get that the 1.4 trillion dollar deficit, the 1.2 trillion dollar health care bill, and the 2 trillion dollar cap-and-tax are going to crush the ability of our nation to ever do bailouts again. They only talk to Geithner and Bernanke. Yet Obama has thrown people under the bus before and these two cannot be counted on. They will be the first to go when Obama needs a scapegoat. Do these "masters of the universe" not understand the fragile base of their delusions. What exactly causes these so-called geniuses to believe the delusion that it will not happen?