THE CARRY TRADE

The Leader was wandering through Asia for the past week trying to look and sound Presidential. Things started off in Japan if not poorly then certainly with a bit of awkwardness when our guy asked to comment on the bombing of Hiroshima and Nagasaki in the opening press conference. The japanese, as a nation, have managed to raise two generations in the belief that the use of the Atom Bomb on them removes most if not all of the Empire's guilt for and during the war (for the youngsters among you, yes, we did go to war with Japan--I know your history books might have overlooked it). Rather than a, "You started it, we ended it, let's all move on---and oh, by the by, the action probably saved 5,000,000 casualties," which is badly needed by the way, The Leader punted. I suppose many would call it skilled diplomacy but after 65 years it's time to get real. In my mind, an opportunity missed which is too bad because nothing else was accomplished other than another low bow to a foreign leader whose old man admitted some time ago that he wasn't divine...with...ah...some encouragement to be sure.

Moving on to Singapore, things got considerably more uncomfortable with the full compliment of Asian leaders in attendance. To begin, everyone had to agree that THE GREAT WE ARE GOING TO END GLOBAL WARMING MEETING IN COPENHAGEN scheduled for December just wasn't going to happen. Bummer. I was really looking forward to a photo op with Michelle and the two kids with the Chick on the Rock but not enough gravitas surrounding the trip will probably nix that. Next up was what I guess what one would call an expression of concern from the assembled gathering as to The Leader's economic policy, focused on fiscal deficits that seemingly are without end and the concurrent slide of the U.S. Dollar which in case you haven't been watching is falling like a rock. Despite The Suit's protestations of support, reports heading this way had the Asians flatly stating that they didn't believe a word of it and that something better happen tout suite (a holdover from the French mandate in the area). The Suit, by the way, is up on the Hill today. More on that tomorrow.

This is a tough go for Mrs. Obama's little boy Barry. You see, as we have spoken of this before, the dollar is the carry trade currency of choice. What that means is you can go out and borrow dollars--lots of dollars--because the interest rate is so low and invest them anywhere. In this country you can buy long dated Treasury Bonds and make a 3% turn or if you are not an American, you can borrow the damn things and invest them in your own country in things like...well...real estate! And wait, it gets even better. Because of the well perceived policy of bugger the dollar being carried out by The Suit and his guys, chances are you will repay your loans in DEVALUED dollars!!! Such a deal...unless you happen to be an Asia finance minister who has to monetize all those dollars pouring into his country and is watching everything around him inflating away to the moon and--dare we say it--bubbles forming all over the place. These guys have seen this movie before; it has a really lousy ending. When asked what he was going to do about this state of affairs, I am told the silence from The Leader and his band of merry men was deafening. The bad part about this is that this bunch are pretty much friends of ours, so I can imagine what the poor guy was expecting when he went off to China. Yep, he got it. But he gave it right back explaining that China had to turn itself into a consumer society otherwise we could all be in trouble. 'Cept China has about 700,000,000 people living as they did in the Ding Dong Dynasty. Consumer society? Wouldn't that work better if they each had a job so they could earn money so they could buy things so they...I wonder if that's what the Chinese told him. I wonder.