Serial Booms and Busts

by Doug Noland

May 2, 2014


How long can the markets ignore Ukraine, Russia and China? After beginning 1987 near 104, the U.S. dollar index dropped almost 10% in nine months. From 7.5% in late-March 1987, 30-year Treasury yields surged more than 270 bps in seven months to trade as high as 10.22% in early October. During this period of currency and bond market instability, stocks set off on a fateful speculative run. At record highs in late-August 1987, the S&P500 enjoyed a year-to-date gain of 39%. This spectacular rise was more than wiped out over a two-week self-off that culminated on “Black Monday,” October 19, 1987.

Back in 1998, an increasingly exuberant U.S. equities marketplace was happy to ignore mounting risk of a Russian collapse (“The West will never allow Russia to collapse”). From January ’98 lows, the S&P500 rallied 30% by early-August to a new record high. Completely ignoring the unfolding crisis, the U.S. bank index (BKX) rallied 40% off of January lows to trade at a record high on July 17, 1998. But as the Russian and LTCM crisis erupted, the bank index fell 43% from July highs to October 8, 1998 lows.

From the October 1998 low to the end of 1999, Nasdaq surged 200%. And after ending ’99 at 4,069 – and in the face of conspicuous Bubble excess coupled with rapidly deteriorating industry fundamentals Nasdaq disregarded reality to trade to its still all-time high of 5,132 on March 10, 2000. From its record high, panic and collapse ensued as Nasdaq lost half its value by year-end.

Major cracks (subprime) erupted in the mortgage finance Bubble in the early-spring of 2007. Stocks suffered from heightened volatility, including meaningful self-offs in the spring and summer. Still, the S&P500 mustered a double-digit year-to-date gain and record highs by mid-October 2007. Stocks rallied back after the failure of Bear Stearns and had posted only modest year-to-date declines by mid-2008. Only a few short months later, all bloody financial market hell broke loose.

Markets are fascinating creatures. Speculative marketplaces, if not suppressed, inherently regress into wild animals. And over the years I’ve drawn an analogy between speculative Bubbles (“bull markets”) and bull fights. After the bull is penetrated by that first sword, the eventual outcome is in little doubt. Yet before succumbing he’s going to turn crazy wild and inflict as much damage as possible.

The concept of “terminal phaseexcess plays prominently in my Macro Credit Analytical Framework. From a monetary standpoint, things just really run amuck at the end of long Credit cycles. The growth of Credit surges uncontrollably, while quality rapidly deteriorates. Even as problems begin to surface, the massive financial infrastructure that built up during the long boom gets stuck in overdrive. This ensures that too muchmoneywhimsically rides roughshod through the financial and economic systems.

To be sure, a hypothetical chart of systemic risk spikes higher. Short-term, the surge in unstable finance fuels asset price inflation, speculation and manic behavior, while dulling the senses to important fundamental developments. The market discounting mechanism malfunctions. Speculative blow-offs tend to be at least partially fueled by short squeezes (short positioning driven by worsening fundamentals), while rampant monetary expansion (including speculative leveraging) covertly exacerbates systemic dependency to readily abundant liquidity. From a monetary standpoint, I believe these dynamics help explain why markets notoriously turn highly unstable near the end of the cycle – with a propensity for destabilizing blow-off tops soon followed by collapses.

With this as the backdrop, first to China. The historic Chinese Credit Bubble has followed a troubling course. In the face of rapidly deteriorating fundamental prospects, overall Credit growth expanded at a record pace throughout 2013 (and into early-2014). In particular, mortgage-related Credit continued to expand rapidly despite weakening growth and heightened financial stress. As it turned out, the apartment Bubble’sterminal phase” was extended. From a systemic standpoint, the ongoing rapid growth in real estate-related Credit took on added significance in the face of tightening Credit for corporations and troubled local governments. I’ve been monitoring for signs of an end to apartment price inflation – and with it a downturn in transactions. From my framework, this would mark an important juncture for Chinese Credit and economic Bubbles.

May 1 – Financial Times (Simon Rabinovitch): “The biggest concerns are focused on property, a sector that fuelled nearly a quarter of the country’s growth last year, according to Moody’s. Sales have slowed sharply just as a large supply of new homes has come on to the market. In the first three weeks of April, sales volumes in China’s 40 top cities were down 24% year on year, according to Soufun, a property information company. ‘We do not believe that economic conditions have stabilised. The biggest direct pressure on the economy is coming from the property market,’ analysts with CEBM, a Shanghai-based advisory, wrote… ‘Even big developers have started cutting housing prices by about 10-15%, and price cuts in the primary (new) home market have led to a clear worsening of the secondary housing market.”

April 30 – Dow Jones (Esther Fung): China’s housing market saw slower growth in April as new data indicated that more cities are experiencing price declines and weaker sales, prompting some local authorities to loosen regulations originally aimed at curbing overheated property sales. Average new home prices rose 9.1% in April from a year earlier, decelerating for the fourth straight month after March’s 10.0% rise and February's 10.8% gainSales remained sluggish in April after a 7.7% decline in the first quarter, analysts said, as home buyer interest waned amid expectations of further price cuts and more hurdles getting mortgages as banks tighten lending requirements in the face of credit concerns and slower growth. China's property market accounted for about 23% of China’s gross domestic product last year…”

May 2- UK Telegraph (Ambrose Evans-Pritchard): So now we know what China’s biggest property developer really thinks about the Chinese housing boom. A leaked recording of dinner speech by Vanke Group’s vice-chairman Mao Daqing more or less confirms what the bears have been saying for months. It is a dangerous bubble, and already deflating. Prices in Beijing and Shanghai have reached the same extremes seen in Tokyo just before the Nikkei boom turned to bust, when the (quite small) Imperial Palace grounds were in theory worth more than California, and the British Embassy grounds (legacy of a good bet in the 19th Century) were worth as much as Wales… The numbers of flats and houses for sale has suddenly doubled. ‘Many owners are trying to get rid of high-priced houses as soon as possible, even at the cost of deep discounts. As a result, ordinary people who want to sell homes in the secondary market must face deep price cuts,’ he said.”

When it comes to Credit Bubbles, I subscribe to a few basic tenets. These include: “They tend to go to unimaginable extremesthen double!” Collapse is unavoidable once Bubbles succumb to “terminal phaseexcess. The more protracted the “terminal phase” the greater the impairment to the financial system and economic structure – and the more painful the inevitable bust. And while analysts of Bubbles are invariably viewed as “extremists,” in the end things are always worse than even the Bubble analysts had suspected.

With the above in mind, it would appear the unfolding Chinese boom turned bust may be approaching a critical juncture. Thus far, overall very strong Credit growth has been sustained. Sinking apartment prices, a change in market psychology and a resulting slowing in sales volumes would lead to an abrupt downturn in new mortgage Credit. A more general slowdown in system Credit growth would surely expose myriad problems (“When the tide goes out…”).

May 2 – Wall Street Journal (Lingling Wei and Dinny McMahon): “With credit tight in China, companies in industries beset by overcapacity are turning to an unconventional source for cash—other companies—in a new rising risk for the country's financial system. These company-to-company loans, known as entrusted lending, have emerged as the fastest-growing part of China’s shadow-banking systemNet outstanding entrusted loans increased by 715.3 billion yuan ($115.4bn) in the first three months of 2014 from a year earlier… The increase in entrusted loans last year was equivalent to nearly 30% of local-currency loans issued by banksalmost double the portion in 2012Officials at the People’s Bank of China, the central bank, have warned that much of the intercompany lending is flowing to sectors where the regulators have urged banks to reduce lending: the property market, infrastructure and other areas burdened by excess capacity. In central Shanxi province, 56% of entrusted loans in the past few years have gone to power producers, coking companies and steelmakers, among others, according to a recent paper by Yan Jingwen, an economist at the PBOC… In an analysis for The Wall Street Journal, ChinaScope Financial, a data provider partly owned by Moody’s…, found that 10 publicly traded Chinese banks disclosed that the value of entrusted loans facilitated by them reached 3.7 trillion yuan last year, up 46% from the previous year. Compared with 2011, the amount was more than two-thirds higher.”

May 2 – Wall Street Journal (Kate O-Keeffe): “The disappearance of a Macau junket figure believed to owe up to 10 billion Hong Kong dollars ($1.3bn) is roiling the world’s largest casino market and putting a spotlight on the opaque network of middle men who drive nearly two-thirds of the Chinese territory’s gambling revenue. Unlike other gambling hubs like Las Vegas, Macau depends on junkets for many of its customers. These companies bring high-spending gamblers to the casinos from mainland China, issue them credit and collect players' debts in exchange for commissions. The system took root there because the Chinese government imposes restrictions on how much cash its citizens can take out of the mainland and because gambling debts aren't considered valid inside China.”

Shifting the analysis back closer to home, economic data this week were notably mixed. The initial estimate of Q1 GDP was a dismal annual 0.1%. And while weather had an impact, the bottom line is that relative to $1 TN of annual QE, surging stock prices, inflating real estate and asset prices, record householdwealth” and some of the loosest financial conditions imaginable – the economy performed miserably. At the same time, it’s good to see the job market improve. But considering the ongoing strong pace of corporate borrowings, the overall lack of employment growth remains ominous.

Throughout the financial markets, Bubble excess seems to turn more conspicuous by the week. From star hedge fund manager David Einhorn: “There is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it.” Obvious Bubble excess in the Credit market also garners increased attention. Bloomberg quoted Apollo Global Management co-founder Marc Rowan from this week’s Milken Institute Global Conference: “All the danger signs are there of a future crisis. We’re back to doing exactly the same things that were done in the credit markets during the crisis.”

It’s been my view that a going on six-year old global government finance Bubble last year suffered its first subprime-like cracks (EM and China). It’s worth recalling Citigroup CEO Chuck Prince’s infamous quote from July 2007 (via the FT): “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

Why was Mr. Prince - and about everyone else - still dancing in the summer of 2007when it seemed rather clear the environment was in the process of changing? Because there was so much money to be made. Because the cautious were being left in the dust. Because it seemed irrational not to be participating in one of the most lucrative financial backdrops ever. Because not participating in the industry boom was career jeopardizing. Because, as Keynes noted a long time ago, if you’re going to be wrong you’d better be wrong right along with the group. The exuberant Crowd had convinced themselves that the Fed had everything under control (“Would never allow a housing bust!”)

I see ample ongoing confirmation of the “Granddaddy of all Bubblesthesis. The stock market is reminiscent of 1999except today’s excesses are more broadly based (and the risks much greater!). Credit market excesses recall 2007, with record leveraged lending fueling record M&A. In total, financial asset prices have inflated to unprecedented levels – in nominal terms and as a percentage of GDP. Globally, record low bond yields in Italy and Spain are indicative of a historic Bubble in European debt and financial assets more generally. Reckless Japanese monetary inflation has made an absolute mess out of Japanese stock and bond markets. Throughout EM, I see financial asset prices that in no way reflect the huge risks overhanging vulnerable Credit systems and real economies. I believe China is an unfolding financial disaster with history’s most maladjusted economic structure. Throughout Asia, massive overcapacity portends trouble for financial assets.

But with central banks still pumping and speculators still leveraging, the mirage of unending cheap liquidity (and central bank backstops!) ensures everyone buoyantly dances the night away. I’m convinced that the ’08/‘09 crisis would have been less damaging had markets begun discounting the changing environment back when subprime first faltered in early-2007. Instead, Fed accommodation spurred another year of “terminal phaseexcess and attendant distortions.

These days, “accommodationdoesn’t do justice to ongoing unprecedented monetary stimulus, which ensures that manic equities and Credit markets completely disregard major fundamental changes in the global landscape. China doesn’t matter. Ukraine and Russia don’t matter. A conspicuously underperforming U.S. economy doesn’t matter. The approaching end to QE doesn’t matter. An alarmingly deteriorating geopolitical environment doesn’t matter. As they say, “It doesn’t matter until it does.” Yet, through it all, don’t lose track of an important fact: They all matter – and together they will matter a great deal.


A Yen for a Mortgage

By John Mauldin

May 03, 2014


For some time I have been saying that I was going to close the mortgage on my new apartment and then hedge it in yen. I promised to tell you the story, including what type of loan I got and how I am doing the hedge. This week I was finally able to pull the trigger. This topic will also let us re-examine why I think the Japanese yen is a screaming short

I am going to make this a shorter letter, as Amsterdam is calling, and it is a beautiful day. This is not a big think piece, but I think many of you will find it interesting. It outlines how I put my economic thinking into actual practice, and names names, if you will, of those who helped me do it.

An ARM and a Leg


But then came the time to get a takeout mortgage. Joe had lent me the total amount at 3.75% for one year.

It soon became apparent I would get only a 70% loan, which would basically take me out of the construction loans. I got lucky in that the appraisals turned out higher than my cost basis, as values have actually moved up. First feelers were not encouraging, so I began to shop.

I wanted a 5-year adjustable-rate mortgage (ARM) with a 30-year amortization. My feeling is that there will be a recession within the next five years (if we do not have one, it will be the longest span on record with no recession in the US) and that rates will once more go way down – and I can then lock in whatever I want, probably a 15-year fixed, at that time. My risk is that we may never again see rates as low as they are today, but that is a chance I am prepared to take. (I really do eat my owncooking.”)

Two personal connections turned up offers in the 4.5% range. Ron was beginning to get feelers in the high 3% range. I called my broker at JP Morgan (more below), and Travis Moss in his office went to work and got me an offer for the 5-year ARM at 2.875%; but it was not clear they could actually do the deal, as high-rise financing is complicated in Texas. About that time, my regular bank, Capital One, changed loan officers. The new guy gave me a courtesy call; and upon finding that I needed a mortgage, he jumped into the process. Rather than a loan that they would securitize, they were looking for a loan to put on the books

They matched the JP Morgan offer and really dropped the closing costs. No points, etc. I sheepishly told Travis (who is a friend) that I was getting a better offer, and within a day he had matched it. We decided to go with JP Morgan, as that is where I am going to do my yen hedge, but it was hard to turn down Clinton Coe from Capital One. He really wanted that loan. When we had our crisis in Texas back in the early 90s, we “lost” our banks to national banks and lost a lot of that personal touch I had known for the first part of my career. It is nice to see bankers like that again in Texas.

I signed the closing papers and had literally just stood up from the table when I took a call from the banker at Capital One, offering to cut the rate to 2.75% and axe a few other costs as well. WOW. Now, in Texas you can cancel a loan commitment for up to three days. I was tempted for a minute, but decided that because I had told Travis I would do the deal, I was not willing to take that back. But I did call Travis and tell him what had happened, joking about it. He saidwait a minute.” He hung up, then quickly called me back and said, “We will match it. Go cancel your loan.” When was the last time your banker tore up your loan and then lowered the rate for you five minutes after you signed the deal?

So I rescinded the first loan and then had to wait another 30 days (the rules) but finally closed on the way to the airport to come to Amsterdam.


A Yen for a Mortgage


Long-time readers know I am a huge bear on the relative value of the Japanese yen versus almost any currency, but especially the dollar. I have been saying for some time that I expect the yen to one day be at 200 and maybe even higher. But that journey is going to take a long time. Forty years ago the yen was at 357 (or thereabouts), and then it rose over time to the high ’70s last year, when it started to fall again. The chart below goes back 43 years. Think, by the way, how your businesses would react if the value of the currency in which you trade rose by a factor of four over 40 years.





Later in the letter I will go more into my reasoning as to why I think the yen will fall over time, but for now let’s look at how I got a “yen mortgage.”

I asked readers to help me find a “pureyen mortgage. I said I thought the market for such a mortgage would be huge, and I would help build it. I must admit, I was somewhat surprised when nothing really turned up. Ten-year government paper in Japan is at 0.6%. You would think that getting 2% for a 15-year mortgage would appeal to someone, but running a few connections still brought me nothing. I even found a US bank that would agree to a takeout and mortgage guarantee, but still no takers. I guess a billion isn’t as big a deal as it used to be.

The basic concept is that if the yen falls by 50% (my bet) and I have my loan structured in yen, then I pay less in dollars. Perhaps a lot less. But since no pure yen loan is available that I can find, a synthetic one will have to do.

There are lots of ways to do it. Futures are the obvious waysimply selling the yen short. But I have no way of knowing timing on the yen, and in my view there will be some significant correctionsalong the way, so using futures would be a constant battle of margins, rolling into forwards, paying commissions with every new contract, etc. And given the new Dodd-Frank rules, it is #$%W$#$ hard to simply tell a broker to execute a trade. To do the trade I ended up doing (see below), I had to be on the phone in the middle of the Amsterdam night to verbally confirm that I was sane and really, really did want to do the trade. But given my travel schedule and possible technological issues, updating my futures trade could have been problematic.

So I elected to keep it simple and do a 10-year put option. I want Abe-san and Kuroda-san to pay for about half my mortgage. I will gladly pay the other half. All they have to do is print yen to fulfill their part of the transaction – and they seem pretty committed.

Warning: Don’t try this at home, kids. This is a VERY risky bet, even though my losses are limited to my entire investment. And while my logic might be compelling, at the end of the day I am trading/betting/gambling (all essentially the same thing) that politicians in a country and a culture I don’t live in and don’t truly understand are going to act in a certain way. They might choose another path with different disastrous results that would make the trade go against me. They have no good choices, only disastrous ones, because they have overleveraged their government and cannot possibly meet their obligations without some kind of default. Rather than outright default to their own retirees, I think they will print and inflate and monetize away that debt. But that’s just me making a trade to counter what I think they will do (and what they tell us they will do). With that preface, let’s look at what I am doing.

To execute the trade, I went to The Plumber. That is my rather affectionate name for Erick Kuebler, a JP Morgan broker here in Dallas. Darrell Cain introduced us, with a rather effusive (for Darrell) endorsement. Having met a few brokers over the years, including some really good ones, I just listened and watched. But as Erick is part of that downtown TCU-grad mafia (a local thing – he was in the same frat with Kyle Bass and a group of guys), he kept showing up at places where I was.

Over time, I realized that Erick understood the workings of the market better than anyone I personally knew. Not the normal things you and I think about, but what really happens when you execute a trade. I simply want to go to a screen and buy or sell, in much the same way that I go to a faucet and turn it on and get water. I expect water to come out when I twist the handle.

The Plumber knows what happens when I do that. He knows where the water comes from, who purifies it, what tank it was stored in before it got to me, whether it will be hot or cold, and what the pressure is. He knows whether to use copper or PVC pipe in the construction. He knows who charges what at each step along the line. I have learned a lot from The Plumber. (Simple ETF trades, for instance, are not all that simple. Especially in size.) For the record, I am a registered broker with my own firm, and you would think I would know this stuff. I kind of knew but had no real idea how many toll gates there are if you are not paying attention. Erick specializes in larger trades for clients trying to avoid those tolls. He laughs at the HFT guys.

Plus, Darrell chose Erick and JP Morgan to handle my self-directed defined-benefit pensions plans (which deserve a whole letter – for the right small business they are a marvelous tax preference vehicle), so Erick was the logical choice to help me do this yen trade.

Buying in-the-money” or close-to-spot options is expensive. While I have no way to know what the yen will be one or two years from now, I truly think that over ten years Japan has no choice but to print massively. So, if I think the yen will eventually get to 200, I can buy an option that allows me to exercise the put at a strike price of 130. If I do a million dollars notional, that means if the yen goes to 200 I make about $700,000. The rules keep me from disclosing how much that put option costs me, but let’s just say that I end up with a nice multiple if I’m right.

Of course, if the market is right (in its current state of unwavering faith) and the yen doesn’t even top 130, I lose all of my option premium. ALL OF IT. 100%.

I will eventually add two more trades, one option at 140 and another at 150, but as I am notoriously bad at timing, I am going to “featherthose trades in over the next few months. I can see the yen dropping below 100 or going above 105 quickly (it is at 102 and change today); but since I don’t know, it just seems better to me to take some time to put the whole trade on. I now have until May 5, 2024, for the yen to rise above 130 … or I take the loss.

Given that I think 200 is where we’re going it doesn’t really matter all that much if we start at 98 or 105; but I think that in general it’s good practice to pace your investments when it’s practical to do so.

A Bug in Search of a Windshield


I wrote about four years ago that Japan was a bug in search of a windshield. In January 2013 I actually started to invest personal assets in the “short Japan story (mainly through funds), and with this week’s action I’m doing so more aggressively. The position represents an outsized portion of my personal portfolio, and it’s one I would not suggest that most people take in such size. But then, you ask, why am I doing it?

I guess I’m a true believer. Japan has a government debt-to-GDP ratio of at least 221% and perhaps as high as 245%, depending on your data source and how you account for certain securities. The interest rates on the Japanese 10-year bond is at 0.6%, yet interest-rate expenses eat up some 23% of total government revenue. (Debt service accounts for 46% of government tax revenue.) If interest rates were to rise to OECD levels, or another 2%, interest-rate expense would eat up 80% of government revenue. That is not a workable business model.

My friends over at Hayman Advisors (Kyle Bass’s fund) sent me the following pieces of data: Added together, Japanese debt service and social security (nondiscretionary spending) exceed government tax revenue and have done so for each of the last five years. The fiscal deficit has been greater than 10% of nominal GDP in each of the last five years. Japan has ~¥1.1 quadrillion of total government debt (~¥1,100 trillion) compared to nominal GDP of~¥481 trillion (a 221% ratio).

Japan has consumed the savings of multiple generations through the sale of government bonds. Japan now has less than 5% of its government debt sourced outside Japan. But the country does notowe it to itself.” It owes it to the tens of millions of savers and retirees who have played the game correctly, worked hard and saved all their lives, and now want to use those savings in retirement.

The largest pension funds are no longer net buyers of Japanese bonds (JGBs). They are now selling, and that tide will swell with a vengeance, since Japan is rapidly aging. Further, the largest pension funds are starting to roll out of JGBs and into equities. Which makes sense, as who wants to own a 10-year JGB at 0.6% if inflation rises to 2%? What rational investor would choose to do that?

Japan cannot afford interest rates to rise all that much. So there must be a good market for JGBs. But who will buy?

Two weeks ago, there was a day and a half when the Bank of Japan was not in the market for 10-year JGBs. Even though they are buying in size every month with their latest aggressive round of QE, there are times when they are notin the market.”

During my recent speeches, I have been asking the room how many JGBs they think traded during the period when the BoJ was out of the picture. Make your guess now.

No one gets it right. For that day and a half, the bond market had zero trades. The Bank of Japan is now the market. Think about that! (See: reuters.com/japan-jgb.)

Given the reality of Japanese finance, I think they BoJ will continue to “hit the bidin order to hold interest rates down. They will space out their buying more to keep those no-trading days out of public view. They will give us a song and dance from time to time to try and keep the valuation of the yen from rising too fast, but in the end they are going to monetize more in absolute terms than the US did in an economy three times Japan’s size. Perhaps as much as $8 trillion over an extended period. That’s the relative equivalent of the US Fed buying $30 trillion and putting it on its balance sheet. If you thought the Fed was going to do that, what would you do now?

What do you think Japanese investors will do when they realize what is happening? Buy equities, of course, but also diversify internationally. This move is going to play havoc with cross-border capital flows into all sorts of markets.

This is a brief synopsis of the Japan story. For a much fuller read, I point you to some of my past letters, or better yet, the full story in chapters two and three of Code Red.

I urge you to be cautious about putting on a “yen hedge” for your own mortgage. It is hard to do and more expensive for options with a notional value of less than $1 million, so it might not fit into your portfolio all that well. Talk with your financial advisor or broker, and really do your own homework. There are very smart people who, like me, are yen bears but who think that 140 or 150 is about as high as the yen will go. When I start talking 200, they think I’m smoking some of the stuff sold in the coffee shops here in Amsterdam. If they’re right, my trade will be in the money but not all that good over time, considering the risk and use of capital.


Eddy has a somewhat different view of the problems facing Europe. He and I see the same issues (debt, impossible-to-keep government promises, no fiscal union, banking capitalization woes, etc.), but he thinks the euro will break up, not in just a few years but much further down the road, in ten years, perhaps. It is his view that the dream of a unified Europe will be chased by politicians all the way to the bitter end. They will kick the can down the road much further than some of us think possible. He believes they can hold it together longer with promises and halfway measures, promises to fix things at the next meeting, etc. I admit to wondering just how they can accomplish that, and we spent a few pleasant hours over lunch on the canals as he explained his views.

Ten years? Wow. A lot of things will change in 10 years, but Keynes is right about this: the markets can stay irrational longer than you can remain solvent. I find it hard to believe that France can stall that long; but then again, we are talking politics, not economics.

It really is time to hit the send button. Have a great week. I am off to ponder how human beings could pile into such small ships and dare the oceans. (I get seasick relatively easily and find a storm at sea to be such an awful idea that I have a hard time even thinking about getting on a boat.) I therefore find it fascinating that it seemed like a good idea at the time and that so many did it. But then again, I am shorting the yenwho knows what craziness true believers will get up to?

Your still trying to think about Europe in 10 years analyst,

John Mauldin