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Originally Posted by DailyFX Analyst
Interesting argument - they are basically making the Pollyanna case that better regulation and improved information flow and risk management will keep global economy buoyant and the environment for the carry trade attractive. Who agrees with that?
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I'm personally not sure that I do. The reason the carry trade took a dive was largely because people had to liquidate their most liquid position to fund loses/margin calls in other less liquid markets. Once this has started to subside money once again flows into the carry. The thing is, if the stock market were to begin performing poorly we could see a similar carry liquidation again. But yes, as long as the BoJ keeps rates low and others their rates high there will always be a return to the carry.
One possible bias to not forget in the article: this came from Citi Group, one of the founders of the Super Fund which has been sharply criticized. Pollyana may be the best way to look at the whole situation...
