The Ugland House, a 5 story office building in the Cayman Islands holds the Headquarters of over 40,000 Hedge Fund companies. The Cayman Islands only has a GDP of $7.1 Billion, but according to government figures, holds over $417.2 Billion of US treasuries, which is now turning out to be over $1 Trillion. Cayman Islands Treasuries holdings $1.8T (4x what's being reported)
you buy bonds with "instant financing" leveraged at 100 to 1....
The prime broker... facilitates a Hedge Fund in Cayman Islands....
Borrow that money via Repo... (short term loan)....
Use that 99% borrowed leveraged cash to repay the prime brokers....
Short a futures contract.... to get the margin..... so you buy back the shorted futures contract at a lower price.
But you can still lose money on the futures speculation and then it all crashes...for example:
bond values go down faster than JPY/USD. So banks will start demanding higher percentages of assets compared to how much they borrow. And that will cause bond prices to go down further and JPY to strengthen.
40% of Treasury Bonds are highly leveraged as Basis Trade speculation....
No comments:
Post a Comment