Dollar Increasingly Used to Fund Carry Trade

``A basket of currencies including the British pound, Brazilian real and Hungarian forint financed with dollars returned 17 percent this year, compared with 9 percent when funded in yen and 7 percent in Swiss francs, according to data compiled by Bloomberg. Falling U.S. interest rates and increasing volatility in the yen and franc are making the trade even more appealing.''

As a free-marketer through-and-through, I hate to say this, but maybe we need some capital controls to put the kibash on this madness. Actually, the problem has been created by central bank manipulation of interest rates and lack of control of margin leverage (a matter of fundamental banking system regulation), but no one wants to talk about changing those practices...