Comment 47A: It is really the time to dial 911 to Japan for help! (Oct. 23)
In Comment 47 we have pointed out that the slumping interest rate in the US can easily touch off a run on yen-carry trades. The unwinding of yen-carry trades will pressure Dollar sharply lower vs. Yen and cause the massive dumping of US stocks, US corporate bonds and commodities. This senario has been played out more or less as anticipated. Now another type of yen-carry trades, that is, between Yen and Euro, have been unwound massively, causing the collapse of Euro not just versus Yen but also versus Dollar. If this worrysome trend is not stopped, the global stock markets and commodity markets will experience a further sharp downward collapse with the danger of pushing the global economy into a depression. The only measure that may stand in the way of this total collapse is for Japanese Government to jump in and start another massive Dollar and Euro buying operation. As have been pointed out earlier if Japanese Government does jump in to save the world by buying Dollar and Euro, this time it must prepare to buy up more than 1 trillion dollar worth of Dollar and Euro to hold the slide of the global economy into an abyss. In Comment 61 we have mentioned that Dow Jones Industrial Average at 7000 is a support, and in the worst case scenario it may test a stronger support at 4000. If the situation is not checked, the test of 7000 will be realized soon, and the collapse to 4000 is not out of question.